Article 106 of the Saudi Commercial Papers Law

المادة 106 من نظام الأوراق التجارية · الفصل الخامس: تقديم الشيك ووفاؤه

The Article provides that if several checks are presented together and cover is insufficient for all, their dates of drawing are taken into account, and the check with the earlier number is preferred if the book and date are the same.

Official text (Arabic)

This article has not been amended since the law was issued.

إذا قدمت عدة شيكات في وقت واحد وكان مقابل الوفاء لا يكفي لوفائها جميعا وجبت مراعاة تواريخ سحبها فإذا كانت الشيكات المقدمة مفصولة من دفتر واحد وتحمل تاريخ إصدار واحد فضل الشيك الأسبق رقمًا.

This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers

Article 106 explained in plain English

This Article addresses a situation banks sometimes face: several checks are presented at the same time while the cover, that is, the balance, is not enough to pay them all.

The rule set by the Article:

The dates of drawing of the checks are taken into account, meaning the check with the earlier date is paid first.
If the checks are from the same book and bear the same date of issue, preference goes to the check with the earlier number.

The condition for applying the Article is that the checks are presented at the same time. If they are presented at different times, the Article does not address that case.

This Article is linked to Article 105, which allows the drawee to pay a check even after the expiry of its presentment period, and to Article 107, which regulates payment of a check payable in a currency not in circulation in the Kingdom. The Article does not say what happens to the remaining checks that the balance was not sufficient to pay.

Holders of checks competing for a single balance who want to know their rights may consult a lawyer who specializes in commercial matters and commercial papers.

Practical example

Three suppliers presented, at the same time, checks drawn on the account of an establishment in Taif, and the balance was enough for only two checks. Under this Article, the dates of drawing are taken into account, and if the checks are from one book and bear the same date, the check with the earlier number is preferred.

Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.

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