Article 114 of the Saudi Commercial Papers Law
المادة 114 من نظام الأوراق التجارية · الفصل الثامن: الشيك المسطر والشيك المقيد في الحساب
The Article makes a drawee that does not observe the preceding rules liable for compensation for the damage, not exceeding the amount of the check.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا لم يراع المسحوب عليه الأحكام السابقة كان مسئولا عن تعويض الضرر بما لا يجاوز مبلغ الشيك.
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 114 explained in plain English
This Article sets a civil penalty on the drawee if it does not observe the rules preceding it.
The Article itself does not list those rules by number, but it falls in the part dealing with the crossed check and the check for credit to account. Among the rules of this part is Article 113, which allows the drawer or holder of a check to stipulate that it is not to be paid in cash by the words "credit to account", so that the drawee may only settle its value by book entries such as crediting an account, a bank transfer or clearing.
The rule set by Article 114:
- Who is liable: the drawee that did not observe the preceding rules.
- Type of liability: compensation for the damage.
- The maximum: not exceeding the amount of the check.
The compensation is linked to the damage and in all cases does not exceed the value of the check. The Article does not specify who is entitled to claim compensation or how the damage is proved.
This liability differs from the rule in Article 115, which deals with the loss by the holder of a check of rights against the drawer, endorsers and other parties liable, other than the drawee, on the expiry of the presentment or protest periods.
Anyone harmed because the bank did not observe these rules, for example by paying in cash a check marked "credit to account", would do well to consult a lawyer who specializes in banking and commercial papers.
Practical example
An establishment in Jeddah wrote the words "credit to account" on a check, but the drawee bank paid its value in cash to another person. Under this Article, the bank is liable to compensate the damage suffered by the injured person, not exceeding the amount of the check.
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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Frequently asked questions about Article 114 of the Saudi Commercial Papers Law
Is the bank liable if it violates the rules on crossed checks or checks for credit to account?
Yes. If the drawee does not observe the preceding rules, it is liable for compensation for the damage.
Can the compensation exceed the amount of the check?
No. The compensation may not exceed the amount of the check.
More articles on The Check
- Article 91
The Article lists the mandatory particulars of a check: the word check, an unconditional order to pay a fixed sum, the drawee's name, place of payment, date and place of issue, and the drawer's signature.
يشتمل الشيك على البيانات الآتية: أ - كلمة (شيك) مكتوبة في متن الصك باللغة التي كتب بها. ب - أمر غير معلق على شرط بوفاء مبلغ معين من النقود. جـ - اسم من يلزمه ال
- Article 92
The Article provides that an instrument lacking a check particular listed in Article 91 is not a check, unless the missing particular is the place of payment or the place of issue.
الصك الخالي من أحد البيانات المذكورة في المادة السابقة لا يعتبر شيكا إلا في الحالتين الآتيتين: أ - إذا خلا الشيك من بيان مكان وفائه اعتبر مستحق الوفاء في المكان
- Article 93
The Article requires checks issued in the Kingdom and payable there to be drawn on a bank, and treats instruments drawn on anyone other than a bank as invalid checks.
لا يجوز سحب الشيكات الصادرة في المملكة والمستحقة الوفاء فيها إلا على بنك، والصكوك المسحوبة في صورة شيكات على غير بنك لا تعتبر شيكات صحيحة.
- Article 94
The Article bars issuing a check unless the drawer has funds with the drawee that can be disposed of by check at the time of issue, and requires the drawer to prove cover if denied; lack of cover does not void the check.
لا يجوز إصدار شيك ما لم يكن للساحب لدى المسحوب عليه وقت إنشاء الشيك نقود يستطيع التصرف فيها بموجب شيك طبقا لاتفاق صريح أو ضمني. وعلى ساحب الشيك أو الآمر غيره بس
- Article 95
The Article allows a check to be payable to a named person with or without an order clause, to a named person with a not-to-order clause, or to bearer, and sets when a check counts as a bearer check.
يجوز اشتراط وفاء الشيك إلى: أ - شخص معين مع النص صراحة على شرط الأمر أو بدونه. ب - شخص معين مع ذكر شرط (ليس لأمر) أو أية عبارة أخرى تفيد هذا المعنى. جـ - حامل ا
- Article 96
The Article allows a check to be drawn to the drawer's own order or for another person's account, and bars drawing it on the drawer himself except between branches of one bank, provided it is not a bearer check.
يجوز سحب الشيك لأمر الساحب نفسه، ويجوز سحبه لحساب شخص آخر، ولا يجوز سحبه على الساحب نفسه ما لم يكن مسحوبا بين فروع بنك يسيطر عليه مركز رئيسي واحد ويشترط ألا يكو
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.