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Cheques: Discharge or Drawer's Liability Only On Clearance and Payment

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image of Arab Law Quarterly

In an action by an exchange company before the Dubai Civil Court against an insurance firm, the Court of Cassation held that the act of handing over a cheque for the value insured by the insurance company is not considered settlement of the insurance company's liabilities and obligations till such time the cheque is actually cleared and paid in full. The Court of Cassation held that the act of delivering a cheque for a value or in blank form does not discharge the insurance company from its obligations and the cheque will be considered conditional upon clearance and till such time the insurance company will continue to be obliged to pay its value.


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