Cheque Dishonour: What Happens After a Bounced Cheque

A dishonoured cheque, commonly referred to as a bounced cheque, is one of the more common disputes involving negotiable instruments. It can occur for several reasons, including insufficient funds or a mismatch in signature.

Once a cheque is dishonoured, the payee generally has the option to send a formal notice to the drawer requesting payment within a specified period. If the amount is not paid despite the notice, the matter can proceed to a complaint before the appropriate court.

Timelines matter in these cases. Notices and complaints are typically subject to time limits, so acting promptly once a cheque is dishonoured is important. Keeping the original cheque, the bank's return memo and any related correspondence in order also helps.

Many cheque dishonour matters are resolved through settlement before reaching trial. Understanding both the process and the possibility of an early resolution can help parties decide how to approach the matter.