The Role and Impact Conditions of Non-Collection of cheques in Contract Termination with Emphasis on Judicial Practice

Articles in Press

Document Type : scientific

Authors

1 Department of Private Law, Faculty of Law, Shahid Beheshti University, Tehran, Iran

2 Assistant Professor, Department of Private Law, Faculty of Law and Political Science, Kharazmi University, Tehran, Iran

Abstract

Although a cheque is a payment instrument, the mere issuance of a cheque does not absolve the issuer from their obligation to pay. To address this gap and to protect the rights of the chequeholder, the parties may adopt provisions such as a right of rescission or a termination clause in the contract. These provisions enable the dissolution of the contract, either voluntarily or automatically, in the event that the cheque is not cleared by the specified date. Despite the seemingly straightforward nature of these clauses, several ambiguities arise which can profoundly affect the continuation or termination of the contract. This research, utilizing a descriptive-analytical approach, explores these ambiguities, particularly in relation to the transfer or endorsement of cheques, the timing of bank presentations, and instances of cheque return. By analyzing the relevant legal precedents, it is concluded that in cases of cheque transfer or endorsement, the condition remains valid and enforceable. Moreover, the failure to clear a cheque is confirmed only if it is presented on the specified date and no fault lies with the issuer, such as insufficient funds or failure to register the cheque in the designated system.

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Main Subjects

Civil Jurisprudence Doctrines

Articles in Press, Accepted Manuscript
Available Online from 04 January 2025

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