The Role and Conditions of the Effect of Non-Payment of a Check on Contract Dissolution with Emphasis on Judicial Practice

Document Type : scientific

Authors

1 Assistant Professor, Department of Private Law, Faculty of Law and Political Sciences, Kharazmi University, Tehran, Iran.

2 Master's in Private Law, Shahid Beheshti University, Tehran, Iran.

Abstract

Although a check constitutes a means of payment, its mere issuance does not, in itself, discharge the debtor’s obligation to pay. Awareness of this gap and the necessity of preventing potential loss have led contracting parties to adopt protective measures in the form of stipulating either an option of rescission or a resolutory condition in their contracts. Through such stipulations, the voluntary or automatic dissolution of the contract is made contingent upon the non-payment of the check on the due date. Despite the apparently simple nature of these conditions, several underlying ambiguities significantly affect the continuation or dissolution of the contract. Using a descriptive-analytical method, this research clarifies ambiguities related to the status of check substitution and transfer, the date and time of presenting the check to the bank, and the effect of various reasons for check return on the fulfillment of the condition precedent and, consequently, the maturation of the suspensive condition and the possibility of contract dissolution, through an analysis of judicial practice. In the case of check substitution or transfer, the survival and extension of the mentioned condition must be acknowledged. Furthermore, establishing the occurrence of the check being dishonored is contingent upon its realization on the date written on the check and the conclusion of that day, provided that the impediment to payment arises from the drawer's neglect or fault-such as insufficient funds or failure to register the check in the Sayyad system-and stems from the drawer's will.

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Main Subjects

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Civil Jurisprudence Doctrines
Volume 17, Issue 32
December 2025
Pages 375-412

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History

  • Receive Date: 12 October 2024
  • Revise Date: 13 December 2024
  • Accept Date: 01 January 2025
  • Publish Date: 22 December 2025

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