Creditors are able to issue proceedings for a “bounced cheque” under the Bills of Exchange Act 1882 (“the Act”). This Act treats payment by cheque as if it were cash and it is considered that the goods or services delivered are undisputed / accepted by the debtor.
This leaves the debtor with limited scope on which to base a defence to the claim, or counterclaim. Suing on a “bounced check” therefore, results in a quicker, more straightforward and less costly recovery process.
If you do receive a cheque which later bounces, it is important to:
1. Keep a copy of the cheque:
2. Write to the debtor asap informing them of the missing payment and asking for a cheque to be re-issued.
If payment is not received, you can then issue through the county court proceedings. Breeze and Wyles specialise in recovery on bounced cheques.
Why is this Act relevant today in an era when the use of cheques is diminishing and electronic payments increasing?
In the 1997 case of Esso Petroleum Company Limited –v- Milton (1997) the Court Of Appeal held that the Bills of Exchange Act 1882 also applies to payment by Direct Debit. This applies where you have an ongoing relationship with a debtor and payments are made by a Direct Debit which is later cancelled and results in a breach of contact.
If you find you are subject to a bounced cheque or direct debit, or simply have a debtor who will not pay our invoice please contact our specialist Debt Recovery Team at Breeze and Wyles Solicitors Limited on 01992 558411 or email us at firstname.lastname@example.org.