AI agents for business finance: what they can and can't do
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The short answer
Yes, it can be. Under the Dishonoured Cheques (Offences) Act, a person who obtains goods, services or credit with a cheque that is dishonoured for lack of funds, when presented within three months of its date, commits an offence punishable by two years' imprisonment without the option of a fine. A company faces a fine of not less than ₦5,000, and its responsible officers can be tried as individuals.
What the Act makes a crime
The Dishonoured Cheques (Offences) Act, as published in the Laws of the Federation, is short. Its core is section 1(1). A person commits an offence if they obtain, or induce someone to deliver, property or credit by means of a cheque that is dishonoured on the ground that there were no funds, or insufficient funds, in the account, and the cheque was presented for payment not later than three months after the date on it.
Three elements matter, and all three must be present:
- Something was obtained with the cheque. Goods, cash, services or credit were handed over because the cheque was given.
- The bank refused it for lack of funds. The Act is about no funds or insufficient funds, not about a signature mismatch or a mutilated leaf.
- It was presented in time. The cheque was presented within three months of the date written on it.
Section 1(2)(b) adds an important detail: where a cheque is given to pay for something under an enforceable contract, the person who issued it is treated as having obtained credit. That closes the gap for people who argue they did not "obtain" anything because the goods came first.
The penalties, as the Act states them
| Who issued the cheque | Penalty under section 1 | Notes |
|---|---|---|
| An individual | Two years' imprisonment, without the option of a fine | Tried summarily in a State High Court (section 3) |
| A company (body corporate) | A fine of not less than ₦5,000 | Section 2: directors, managers or officers responsible can also be tried and punished as individuals |
The ₦5,000 figure for companies is the one in the published Act text; it has not kept pace with inflation, which is why section 2 matters more in practice. A director who signed a company cheque knowing the account was empty can face the individual penalty.
So can you actually be arrested?
Because issuing a dud cheque in these circumstances is a criminal offence, the person who received it can make a complaint to the police, and the police can investigate and, where the law allows, arrest and charge. The Act itself does not set out a procedure for complaints; it creates the offence and says where it is tried.
Being reported is not the same as being guilty. A prosecutor must still prove each element. Many dud cheque disputes are, at heart, unpaid debts, and settling the debt often ends the matter in practice, although once a charge is filed it is for the prosecution and the court, not the complainant alone, to decide what happens.
The defence in section 1(3)
The Act gives a specific defence: a person is not guilty if they prove that, when they issued the cheque, they had reasonable grounds for believing, and did believe, that it would be honoured if presented. Examples of what might support that belief:
- A credit alert or confirmed inflow that was later reversed.
- A written promise from your bank of an overdraft that was then withdrawn.
- A customer's confirmed payment into your account that bounced back.
Keep the evidence. Bank statements, alerts and letters are the material a court will look at. Our guide to screenshots and alerts as evidence explains how electronic records are handled.
If you issued the cheque
- Contact the payee in writing as soon as you learn it bounced, acknowledge it and propose a date to fund the account or pay another way.
- Fund the account and ask the payee to re-present, or pay by transfer and ask for the cheque back, or a written confirmation that it is settled.
- Check the date on the cheque. If more than three months had passed before it was presented, section 1(1) does not apply, although the debt itself remains.
- If you are contacted by the police, ask what offence is alleged and get legal advice.
If you received the cheque
Keep the returned cheque and the bank's return slip showing the reason. A cheque returned for "refer to drawer" or insufficient funds is the kind the Act addresses. You have two separate routes, and they can run side by side:
- Criminal
- A complaint to the police under the Act. The aim is prosecution, not payment.
- Civil
- A demand letter and, if needed, a claim for the money. In Lagos, the small claims court hears liquidated money claims of up to ₦5,000,000, excluding interest and costs, under its 2023 Practice Directions.
The step-by-step recovery route is in our companion guide, cheque bounced: how to recover the money, and the timing of clearing is covered in cheque clearing in Nigeria.
It can follow you on your credit report
CRC Credit Bureau's FAQ lists dishonoured cheques among the sections of a credit report, alongside credit history and suits filed. A record of dud cheques can affect how lenders view you later.
Where Pryme fits
If you would rather avoid cheques, a transfer from a Pryme account leaves a dated record of exactly what was paid and when, and you can generate a verifiable receipt for it through our partnership with VerifyDoc.ai (receipts). See sending money.
Questions people ask
Is issuing a dud cheque a criminal offence in Nigeria?
Yes, where the cheque was used to obtain property or credit, was dishonoured for no or insufficient funds, and was presented within three months of its date, under section 1(1) of the Dishonoured Cheques (Offences) Act.
What is the punishment for a dud cheque in Nigeria?
For an individual, the published Act provides two years' imprisonment without the option of a fine. For a company, a fine of not less than ₦5,000, and responsible officers can be punished as individuals.
Can I go to jail if my cheque bounced by mistake?
Section 1(3) is a defence if you prove you had reasonable grounds to believe, and did believe, the cheque would be honoured. Keep any evidence of expected funds and speak to a lawyer.
Does paying back the money stop a dud cheque case?
Paying often resolves the dispute in practice, but once a charge is filed the prosecution and court decide how the case proceeds. The debt and the offence are separate.
Sources
- Dishonoured Cheques (Offences) Act, Laws of the Federation (PLAC) · accessed Oct 2026
- CRC Credit Bureau: frequently asked questions · accessed Oct 2026
- Lagos State Small Claims Court Practice Directions (2023) · accessed Oct 2026
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