Do unpaid cheques fall under the NCA?

[Dave A]

I haven't had a problem with bounced cheques from clients for ages, so never thought about this before -

If a client's cheque comes back unpaid, would that be classed as incidental credit under the NCA?

[Marq]

A bounced cheque is seen as an acknowledgement of debt instrument, so I would guess that there is definite legal argument that this would be the case.

[Brett Bentley]

Section 4(5) of the NCA reads:

If a person sells any goods or services and accepts, as full payment for those goods or services-
(a) a cheque or similar instrument upon which payment is subsequently refused for any reason; or
(b) ... basically a credit card payment

the resulting debt owed to the seller by the issuer of that cheque or charge does not constitute a credit agreement for any purpose of this Act.

[Dave A]

Whoopee! Thanks Brett!

On a slightly different tack, since I posed the question I had someone comment to me that there is also a difference between a company and a personal cheque. Apparently if it is a personal cheque, it's fraud whereas with a company cheque it isn't.

I don't know if anyone else here has a view on that particular little morsel.

[Marq]

OK - seems my views have been off course of late but here goes on this question.

Both should be treated the same. The only difference is that as a signatory to the company cheque, care must be taken to ensure that funds are in the bank to cover the amounts being paid and that the cheque clearly reflects that the signatory is signing on behalf of the company.

Failure to do that will make the signatory personally liable should the company not meet its obligation.

I am not sure whether fraud is indicated - this would probably depend on the circumstances and the tests for fraud. Things like intent to fraud...etc

[garthu]

Ever tried to lay a charge of fraud for an RD cheque?? The cops told me it was civil, not criminal etc etc. No amount of persuading could convince them to open. That was for R190K. Whilst it is fraud (my attorney confirmed it is criminal), winning is another story

[sgafc]

Question:
Why are banks attacking cheques? Why do they find all the excuses not to cash good "uncrossed" cheques? Do they want to do away with cheques altogether?

I somehow feel that they are pressurising us to go EFT(cashless society)

[Dave A]

Why do they find all the excuses not to cash good "uncrossed" cheques?

Probably the risk that the transaction turns out to be fraudulent. Once you've handed over the cash, it's a lot harder to claw back than bouncing the cheque a few days later.

[sterne.law@gmail.com]

Probably the risk that the transaction turns out to be fraudulent. Once you've handed over the cash, it's a lot harder to claw back than bouncing the cheque a few days later.

Saw this old thread by virtue of another.
Bank is not affected if a cheque is uncrossed they may cash it.
A crossing, irrespective of wordin, pay only, not negotiable etc, merely means that tehy must pay it into a bank account.
An uncrossed cheque to cash, is a bearer cheque, thus payable to whoever is in possesion.

Re the fraud, fraud requires intention and that will have to be proved. That is they had no intention for funds to be present. It really should be as simple as when you wrote cheque there had to be funds, failing which go straight to jail.

A cheque does however, qualify for provisional sentence proceedings, a quicker cheaper collection process than ordinary summons.