Knowledge About Cheques and Notable Supreme Court Rulings

A cheque is a widely used financial instrument in business and financial transactions in Thailand. However, improper use of cheques or issuing a cheque without sufficient funds can lead to legal consequences. Therefore, cheque users should understand the relevant legal principles and Supreme Court rulings regarding cheques to ensure proper and lawful practice.

What Is a Cheque and What Are the Relevant Legal Provisions?

A cheque is a written document instructing a bank to pay a specified amount from the drawer’s bank account to the payee. The key elements of a cheque include:

• The name of the bank where the cheque is to be cashed.
• The name of the payee, which can be a specific person or “bearer.”
• The amount to be paid.
• The date of issuance, which marks when the cheque becomes valid.
• The signature of the drawer, which must match the signature on the bank account.

According to the Cheque Offenses Act B.E. 2534 (1991), issuing a cheque without sufficient funds or unlawfully stopping payment may constitute a criminal offense.

Dishonored Cheques and Their Legal Consequences

A dishonored cheque (bounced cheque) occurs when a bank refuses to honor a cheque due to various reasons, such as:

• Insufficient funds in the account.
• A closed bank account.
• Errors on the cheque, such as an incorrect signature.
• The drawer unlawfully stopping payment without a valid reason.

Criminal Liability for Issuing a Dishonored Cheque

Under Section 4 of the Cheque Offenses Act B.E. 2534 (1991), a person who issues a bounced cheque may face:

• Imprisonment for up to one year,
• A fine of up to 100,000 baht, or
• Both imprisonment and a fine.

Additionally, the cheque holder may pursue civil litigation to reclaim the amount owed, including interest, provided that the lawsuit is filed within three months from the date the cheque was dishonored.

Notable Supreme Court Rulings on Cheques

Supreme Court Judgment No. 341/2559 (2016)

• Facts: The defendant issued a cheque to the plaintiff for deposit, but when the plaintiff presented it for payment, the bank refused due to insufficient funds. The plaintiff then filed a criminal complaint.
• Court Ruling: The Supreme Court ruled that the defendant knowingly issued a cheque without sufficient funds, constituting an offense under the Cheque Offenses Act B.E. 2534 (1991). The defendant was found guilty.
• Key Takeaway: Issuing a cheque without available funds, regardless of intent, can result in criminal liability.

Supreme Court Judgment No. 8723/2560 (2017)

• Facts: Mr. A issued a cheque for 500,000 baht to Company B. However, the bank refused payment because the account had already been closed. Company B then sued Mr. A in both civil and criminal court.
• Court Ruling: The Supreme Court determined that Mr. A knowingly issued a cheque from a closed account, demonstrating fraudulent intent. As a result, he was held criminally liable.
• Key Takeaway: Issuing a cheque from a closed account may indicate fraudulent intent and result in criminal penalties.

Supreme Court Judgment No. 1839/2561 (2018)

• Facts: Mr. C received a cheque from Mr. D and attempted to cash it. The bank refused due to insufficient funds. Mr. C filed a criminal complaint but did so more than three months after the cheque bounced.
• Court Ruling: The Supreme Court ruled that a criminal complaint must be filed within three months from the date the cheque is dishonored. Since Mr. C failed to file within this period, criminal charges could not proceed. However, he could still pursue a civil lawsuit.
• Key Takeaway: Criminal complaints for dishonored cheques must be filed within the legal time frame, or the right to criminal prosecution is lost.

Best Practices for Using Cheques Properly

To avoid legal issues when using cheques, consider the following recommendations:

• Verify the credibility of the drawer before accepting a cheque. Ensure the account holder is financially stable.
• Avoid issuing cheques without sufficient funds to prevent legal complications.
• Take immediate action if you receive a bounced cheque. File a complaint within three months or pursue civil litigation.
• Keep all relevant documentation, including the dishonored cheque, the bank’s rejection notice, and other supporting evidence.

Cheques play a crucial role in the financial system, but improper use can lead to both civil and criminal liabilities. Understanding legal provisions and relevant Supreme Court rulings can help cheque users comply with the law, reduce legal risks, and protect their rights.

If you encounter legal issues related to cheques, consulting a lawyer can help ensure appropriate and timely legal action.