1 Bounced cheques A cheque “bounces“ when the bank where the issuer of the cheque has an account does not honour it.
2 Cheques are dishonoured by the bank if there are insufficient funds, a signature mismatch, overwriting or a stale date.
3 Banks charge a penalty for bounced cheques. The fee varies from bank to bank and based on customer catergorisation within a bank.
4 A bounced cheque can adversely impact the defaulter’s credit history and credit score.
5 The payee can take legal action against the issuer of the cheque for wilfully issuing an instrument that did not represent valid payment.
6 If the issued cheque is against a donation or gift, there is no valid con sideration and no legal recourse is available if such cheques bounce.