Law Simplified Video
Begin with our short Law Simplified video for a concise explanation of this legal topic. Then continue reading for a more detailed discussion below.
Introduction
A cheque that bounces can lead to more than an awkward conversation with your banker, it can trigger criminal liability. Recent Court of Appeal authorities make clear the elements the prosecution must prove, the defenses available, and when company directors or alter-egos can be held personally responsible. This post distils the law and the practical lessons lawyers, corporate officers and commercial parties need to keep in mind.
The statutory offence is short and strict
Section 1 of the Dishonoured Cheques (Offences) Act, Cap D11 LFN 2004 creates the offence. The Act targets situations where a person obtains credit or induces delivery by means of a cheque which, when presented for payment not later than three months after its date, is dishonoured because there were no or insufficient funds in the drawer’s account. Corporate defendants are exposed too: where an offence by a company is shown to have occurred with the consent, connivance or neglect of an officer (director, manager, secretary or similar), that officer may be proceeded against as an individual.
Ingredients the prosecution must prove
The case law consistently sets out the three core elements the prosecution must prove:
1. the drawer obtained credit or induced delivery (or the cheque was issued to settle an existing obligation);
2. the cheque was presented for payment within three months from its date;
3. and on presentation the cheque was dishonoured for want of funds or insufficient funds in the drawer’s account.
See the Court of Appeal pronouncements in these leading authorities:
ABUJA LEASING CO. LTD v. MAYOWA & ORS (2020) LPELR-51049(CA) Per EMMANUEL AKOMAYE AGIM, JCA (Pp 8 – 11 Paras D – E) .
ULOH v. FRN (2021) LPELR-55192(CA) Per STEPHEN JONAH ADAH, JCA (Pp 16 – 18 Paras F – C).
ONYEKUMNARU v. FRN (2018) LPELR-46040(CA) Per UGOCHUKWU ANTHONY OGAKWU, JCA (Pp 39 – 41 Paras C – D).
These authorities repeatedly emphasize the statutory tripartite test and apply it to varying fact patterns.
What the courts accept as “obtaining credit” or an equivalent
The Act and cases make clear that a cheque issued in settlement (or purported settlement) of an enforceable contract is treated as obtaining credit by the drawer. In commercial transactions (sale of goods, loan repayments, collection arrangements) a cheque given to satisfy the obligation will ordinarily satisfy the “obtained credit / delivery” leg if the other elements are met.
See, for example: OJUKWU v. FRN (2019) LPELR-46494(CA) Per CHINWE EUGENIA IYIZOBA, JCA (Pp 29 – 36 Paras C – D).
MONSOUR v. FRN (2018) LPELR-46632(CA) Per JOSEPH SHAGBAOR IKYEGH, JCA (Pp 27 – 32 Paras A – D).
Timing: the three-month window
Presentation within three months of the cheque’s date is essential. If the cheque is presented within that period and returned for insufficiency of funds, that fact is strong proof of the statutory offence, provided the prosecution establishes the other ingredients. Numerous appellate decisions affirm this timing rule; presentation outside the window will affect the charge. See the authorities cited above.
Mens rea, reasonable belief and strictness of the offence
Although the statute sets out seemingly strict consequences, the Act includes an express defence: a person who proves that, when the cheque was issued, he had reasonable grounds for believing, and did in fact believe, that it would be honoured is not guilty. Courts have therefore treated the offence as one where the prosecution must prove the statutory ingredients, but the drawer may avoid conviction by proving a bona fide belief that the cheque would be met. Appellate authorities explain how that defense operates and the evidential burdens placed on accused persons.
See: OJUKWU v. FRN (2019) LPELR-46494(CA) Per CHINWE EUGENIA IYIZOBA, JCA (Pp 29 – 36 Paras C – D).
MONSOUR v. FRN (2018) LPELR-46632(CA) Per JOSEPH SHAGBAOR IKYEGH, JCA (Pp 21 – 26 Paras A – F).
If the drawer raises the reasonable-belief defence, the evidential burden shifts to him to present facts establishing those reasonable grounds; the prosecution still bears the legal burden of proof of the offence beyond reasonable doubt.
Corporate liability and the “alter-ego” problem
Courts will pierce the corporate veil where the evidence shows the individual charged was the company’s alter-ego, or where the offence by the body corporate involved the consent, connivance or neglect of a director or similar officer. A managing director who signs company cheques and acts as the driving force behind transactions cannot escape liability simply by invoking separate corporate personality; the Act and appellate decisions treat such officers as personally culpable where the statutory test is satisfied.
See: MONSOUR v. FRN (2018) LPELR-46632(CA) Per JOSEPH SHAGBAOR IKYEGH, JCA (Pp 27 – 32 Paras A – D).
ABUBAKAR v. FRN (2022) LPELR-58650(CA) Per ITA GEORGE MBABA, JCA (Pp 30 – 31 Paras F – B).
Practical point: companies should ensure dual signatory controls and robust treasury practices; officers should keep documentary proof of funds and credit facilities relied upon.
Settlement after the event — mitigation, not immunity
Courts have been clear that settling the underlying debt after a cheque bounces does not automatically exculpate the drawer from criminal responsibility. Post-offence repayment may be a mitigating factor at sentencing, but it does not erase the offence if the statutory elements were established at trial.
See: ABUBAKAR v. FRN (2022) LPELR-58650(CA) Per MUHAMMED LAWAL SHUAIBU, JCA (Pp 33 – 33 Paras A – A).
Abuse of process and manufactured complaints
Not every failed payment should be turned into a criminal charge. Where the evidence shows manipulation, for example, a creditor deliberately lodges a cheque into an empty account or fabricates presentation to create the impression of a dud cheque, courts will treat such conduct as capricious and may condemn misuse of police machinery to recover civil debts. Allegations of manufactured complaints or collusion will be treated seriously.
See: ADJARHO v. IGP & ORS (2021) LPELR-55557(CA) Per BIOBELE ABRAHAM GEORGEWILL, JCA (Pp 44 – 46 Paras B – D).
Jurisdictional notes
The Federal High Court can have jurisdiction in cheque-related matters where the defendant or complainant involves a federal agency or where the statutory offence falls within its remit; parties should therefore assess proper forum early.
See: RIVERS STATE MICROFINANCE AGENCY v. ISOKARIARI & ANOR (2018) LPELR-44863(CA) Per BITRUS GYARAZAMA SANGA, JCA (Pp 14 – 17 Paras C – B).
Practical takeaways for practitioners and commercial clients
1. Before issuing cheques, ensure funds or credible liquidity arrangements exist.
2. Documentary proof (bank statements, confirmed overdraft facilities, letters of credit) can be decisive if a reasonable-belief defence is raised.
3. Where a company is involved, keep clear corporate records showing who authorised cheques and the purpose; directors should avoid being sole signatories where possible.
4. If you receive a bounced cheque, consider carefully whether police involvement is appropriate; a criminal complaint is justified when the statutory elements are present but misuse of criminal process to pressure debtors can backfire.
5. If accused, gather contemporaneous evidence showing the basis for any belief that the cheque would be honoured (e.g., expected incoming receipts, reconciled books, bank confirmations). The evidential strength of those documents matters.
6. Settlement after dishonour may help on sentence but will not necessarily prevent conviction.
Conclusion
The law on dishonoured cheques in Nigeria balances commercial certainty and banking trust against protection from abuse. The Dishonoured Cheques (Offences) Act provides a powerful criminal remedy where cheques are used to obtain credit or induce delivery and are dishonoured for want of funds. Yet the statute also recognises a fair defence where the issuer genuinely and reasonably believed the cheque would be honoured. Careful record-keeping, prudential treasury controls and sensible use of criminal procedures are the best safeguards for businesses and individuals alike.
Disclaimer:
This post is a general legal summary for informational purposes only. It does not constitute legal advice. For case-specific guidance, pleadings, or representation, consult a qualified lawyer who can review the full facts and applicable documents.
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