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The short answer
Under the Dishonoured Cheques (Offences) Act, issuing a cheque that is dishonoured for lack of funds when presented within three months of its date is an offence where it was used to obtain goods, money or credit. On conviction an individual faces two years' imprisonment without the option of a fine, and a company a fine of not less than ₦5,000. The payee can also sue for the debt.
What the Act makes an offence
The Dishonoured Cheques (Offences) Act is a short federal law. Section 1(1) makes it an offence where a person obtains, or induces the delivery of, anything capable of being stolen, or obtains credit, by means of a cheque that is dishonoured for lack of funds or insufficient funds when presented for payment not later than three months after the date of the cheque.
Two points in that wording matter in practice:
- The cheque must be dishonoured because there was no money, or not enough money, in the drawer's account. A cheque returned for a signature mismatch, an alteration or a stop instruction is not the same ground.
- It must be presented within three months of the date written on it. A payee who waits longer loses the criminal route under this Act, though not the right to sue for the debt.
Section 1(2)(b) closes a common excuse. Where a cheque was issued to settle an obligation under an enforceable contract, the drawer is treated as having obtained credit, even if the method of payment was not fixed when the contract was made. So paying a supplier or landlord with a cheque that bounces can fall within the Act.
The penalties
| Offender | Penalty on conviction (s.1(1)) |
|---|---|
| Individual | Imprisonment for two years, without the option of a fine |
| Body corporate (company) | A fine of not less than ₦5,000 |
| Director, manager, secretary or officer of the company | Can be prosecuted and punished as an individual where the offence was committed with their consent or connivance, or through their neglect (s.2) |
Under section 3, the offence is tried summarily by the High Court of the state where it was committed, and the state Attorney-General has prosecution powers, without excluding the federal Attorney-General. The Act's figures date from when it was made; the ₦5,000 is a minimum, not a maximum.
The defence
Section 1(3) gives the drawer a defence if they prove that, when they issued the cheque, they had reasonable grounds to believe, and did believe, that it would be honoured if presented within three months. A drawer who expected a credit that did not arrive may rely on it; the court decides whether the belief was reasonable.
What a payee can do
- Get the returned cheque and the bank's return slip showing the reason. Without the reason, you cannot tell whether the Act applies.
- Write to the drawer, give them a date to pay, and keep a copy. Many bounced cheques are settled at this stage.
- If the cheque was returned for lack of funds within three months of its date, you can report to the police, who may investigate and pass the matter for prosecution.
- Separately, you can sue for the amount as a debt. A cheque is a bill of exchange under the Bills of Exchange Act (s.73), and a dishonoured one is evidence of the debt.
- Ask a lawyer before you threaten prosecution to get paid. Using a criminal complaint purely as leverage in a civil debt can backfire.
Effects beyond the courtroom
A bounced cheque also follows the drawer through the banking system. The Credit Registry's FAQ lists dishonoured cheque records among the sections of a credit report, so a returned cheque can show up when the drawer next applies for credit. Lenders who take post-dated cheques as loan security, as some microfinance and non-interest products do, may treat a returned cheque as a default under the loan agreement.
Avoiding a bounced cheque as a drawer
- Do not issue a post-dated cheque unless you are sure the money will be there on the date, and remember the payee can present it within three months of that date.
- If a payment cannot be met, tell the payee before the cheque is presented and agree a new date in writing.
- If you must stop a cheque, do it formally with your bank. See how to stop a cheque.
- Check how long the cheque stays presentable: how long a cheque is valid.
Is the law changing?
The text above reflects the Act as published on the PLAC Laws of Nigeria site, read in October 2026. Proposals to amend it surface from time to time; before acting on a case, check with a lawyer whether any amendment has been passed since. Note too that the ₦5,000 figure is old and is stated as a minimum fine for companies, so a court is not limited to it.
Where Pryme fits
For businesses that are tired of chasing cheques, Pryme's bank-transfer checkout lets customers pay by transfer, free of charge, and invoicing keeps a record of what was paid. Cheques still have their uses; see our guide on bank drafts and cheques.
Questions people ask
Is issuing a dud cheque a crime in Nigeria?
Yes, under the Dishonoured Cheques (Offences) Act, where the cheque was used to obtain goods, money or credit and was dishonoured for lack of funds when presented within three months of its date.
What is the punishment for a bounced cheque in Nigeria?
For an individual, 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 prosecuted as individuals.
Can I sue someone for a bounced cheque?
Yes. Apart from any criminal complaint, a payee can sue for the amount as a debt. Keep the returned cheque and the bank's return slip.
What if the cheque was presented after three months?
The offence in the Act applies only where the cheque was presented within three months of its date. The civil claim for the debt remains.
Sources
- Dishonoured Cheques (Offences) Act, Laws of the Federation (PLAC) · accessed Oct 2026
- Bills of Exchange Act, Laws of the Federation (PLAC) · accessed Oct 2026
- Credit Registry: FAQs · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.