Dishonoured Cheques – Act Fast Or Face Cheque-Mate

Dishonoured cheques are a risk at any time for local businesses, but especially in times of economic recession. However, historic Isle of Man legislation exists to protect local business and residents against cheques "bouncing"; provided though that they act swiftly.

Under section 3 of the Bills of Exchange Act 1883 (the Act) a cheque is defined as an unconditional written instruction by an account holder to their bank instructing payment of a specified sum of money to a named beneficiary. Once a cheque is presented, the person presenting the cheque (the Payor) is confirming to the person receiving the cheque (the Recipient) that it will be honoured.

When goods or services are paid for by cheque, there are two separate contracts. The first of these is the actual contact for the supply of the goods and services; however, a second contract is also entered into by presenting a cheque, which is an unconditional promise to pay the Recipient. Therefore, should a