Introduction:

This article is neither an encouragement nor prevention to demand, or issuance of post-dated cheques by contracting parties. It simply intends to look at some legal frameworks, precedents and policy of government on whether or not it is illegal to demand for (as a lender), or issue (as a borrower) a post-dated cheque in the course of a business, and other related transactions.

An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable time a sum certain in money to the order of a specified person, or to a bearer is known as a bill of exchange.[i] A cheque falls within the purview of a bill of exchange,as it is drawn on a banker, and payable on demand.[ii]A post-dated cheque on the other hand is a cheque that bears the date after the date of its issue and its payable on or after the date stated.[iii]

It is not uncommon for loan facility lenders to demand that a borrower signs a post-dated cheque in order to secure their loans, such that in the event that the borrower is unable to discharge the debt at the maturation date, the lender can go after the borrower’s funds. It is all halcyon in the event that upon presentment of the post-dated cheque at the Drawer’s bank, the funds are sufficient to satisfy the debt obligation. Issues usually arise in the event that the cheque is dishonoured. For instance, if MrA issues a post-dated cheque of a million Naira to mature in three months toMrB with the firm believe that his present account status as at the date of issuance would be sufficient to honour the one million Naira at the maturation date (three months’ time), but upon presentment of the cheque to MrA’s bank at the due date, B is told that A’s account balance is insufficient to honour the cheque.[iv]

The scenario above is a sufficient ground for instituting criminal and, or civil action against the drawer as it constitutes an offence in the DishonouredCheques (Offence) Act.[v] Section 1 (1) (b) (i) provides two years jail term in the case of an individual (without the option of fine), and a fine of not less than N5,000.00 only for body corporate. The offence of obtaining by false pretences under S.419 of the Criminal Code,[vi] and the tort of deceit amongst others can also be distilled from the above scenario. Consequently, the issuance of a post-datedcheque per se is not illegal; it is the paucity of funds in the drawer’s account that may amount to an action in tort, or a criminal liability with the involvement of the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices Commission (ICPC) amongst other prosecutorial agencies of government.

It should be realised that prove of the drawer’s menserea[vii]in the case of the post-dated cheque being dishonoured is not a requirement to show the commission of the offence, thus almost equating it to the status of a strict liability offence.In the recent case of OJUKWU V. FRN (2019),[viii]Per IYIZOBA, J.C.A unequivocally affirmed that “It is also a misconception to talk about proof of intention to defraud as there is no such requirement in the law.”

According to Onnoghen JSC in thepopular case of ABEKE V. STATE (2007),[ix] all that is required of the Prosecution is to prove:

(a) That appellant obtained credit by herself

(b) That the cheque was presented within three months of the date thereon: and

(c) That on presentation the cheque was dishonoured on the ground that there was no sufficient funds or insufficient funds standing to the credit of the drawer of the cheque in the bank on which the cheque was drawn.

In other words, the Prosecution is only required to show that the Defendant obtained delivery to himself of something capable of being stolen by means of a cheque. Secondly, that the cheque was presented by the Complainant within three months of the date issued, and lastly, upon presentment, the cheque was dishonoured on the ground that there was no sufficient funds or insufficient funds standing to the credit of the drawer of the cheque in the bank on which the cheque was drawn; to the knowledge of the drawer.

This last leg of the Per Onnoghen JSC’s affirmation appears to fall under the defence provided in Section 3 of the Act. Consequently, the onus of prove rests squarely on the Defendant to prove to the satisfaction of the Court, that he did in fact have a reasonable believe that the money standing to his credit in his account is enough to satisfy the amount stated on the cheque on or after the date of presentment by the payee.[x]

The Central Bank of Nigeria, in exercise of her regulatory functions, also issued some guidelines on chequesand other forms of negotiable instruments. For instance cheques, whether post-dated or otherwise, presented after six months would not be cleared, a revalidation/reissuance would have to be executed by the drawee.[xi]

From the foregoing, it is clear that, the demand or issuance of a post-dated cheques impliciter is not illegal; it is the paucity of funds in the drawer’s account that may amount to an action in tort, or criminal liability.

UZOMA, Felix Izuma,

+234-8167019838, [email protected]

Associate, at Likko& Associates, (Consultant: N.A. Dangiri, SAN,FCIArb) Abuja.

[i]See S. 3, Bills of Exchange Act, Cap B8, LFN 2004.

[ii]S. 73, Bills of Exchange Act.

[iii]Black’s Law Dictionary, 8th Ed.

[iv]Usually, the Bank would emboss on the face of the cheque, the alphabets ‘DCR’, meaning, Drawer’s Confirmation Required.

[v]Cap D11 LFN 2004.

[vi]Cap C38, LFN 2004.

[vii]The intention or knowledge to commit the offence, as opposed to the action or conduct of the drawer

[viii]LPELR 46494 (CA) ( Pp. 29-36, paras. C-D )

[ix]ALL FWLR (PT. 366) OR (2007) 9 NWLR (PT. 104) AT 411.

[x]Section 3, of the Act state that: A person shall not be guilty of an offence under this section if he proves to the satisfaction of the Court that when he issued that cheque he had reasonable grounds for believing, and did believe in fact, that it would be honoured if presented for payment within the period specified in Subsection (1) of this Section.

[xi]See the Revised Nigeria Banker’s Clearing System Rules (2018)