This same situation was faced by a client who tried to cash in a cheque for forty thousand euros on an empty account, and is also shared in times of crisis, unfortunately, by many other hundreds who have a euro denomination cheque that is not worth the paper it is written on.
This takes us automatically to the subject of this post, it being the legal implications of giving out worthless cheques or promissory notes as well some notes on how these instruments operate in Spain.
Spanish penal code has eliminated the punishability per se of giving out bad cheques (cheque sin fondos), and has associated it, necessarily, with intent to swindle (estafa) so as to make this a criminal offense. However, swindle with a cheque aggravates the criminal action and carries a higher sentence because it is considered that the “use of certain mercantile instruments to commit swindle irrespective of its authenticity or falsity is in itself graver due to the massive use of these instruments in commerce”.
So what really determines if we go to jail or not is intent. Case law establishes that this intent to defraud has to be precedent, antecedent and causing a material or monetary damage, meaning, in other words, that the perpetrator knows full well from the inception of the contract that he will not comply or be able to comply with his obligation to provide consideration, and will enrich himself by doing this. At the same time, the intent to defraud will have to be parallel to a concealment of the truth, or deceit, and as a judge puts it “not being a clumsy, fantastic or not credible deceit, incapable of moving the will of people constituted intellectually.”
In these type of cases there is very fine and blurred line between a mere civil default and a criminal swindle case potentially able to offer an unappealing 4 year prison sentence, and case law, as usual, offers very interesting situations.
As an example, the courts acquitted 2 businessmen who gave out bad cheques because it was proven, in the first case, that non-payment of them happened in a situation of severe financial difficulty (company loan facilities were not being repaid), and in the second that it was not possible to discern punishable conduct because the accused did not concoct or stage a plan to create an expectation of solvency (inexistent), nor did he omit or conceal elements of reality what would have been enough to dissuade the company delivering Jamones Serranos to do so, particularly when they had been doing business together for many years.
Then there is the interesting figure of the postdated cheque (cheque posdatado) which, although does not change its payment at sight nature (Spanish cheques are ALWAYS payable on demand and within 15 days from them being signed), it does alter the consequence of someone not honouring them, since they are no longer considered to be immediate payment instruments but have morphed into a credit facility, guarantee of payment or deferred payment facility, therefore losing its condition of cheque. This happens, according to the Spanish Supreme Court, when cheques are postdated by at least 1 month or are re-written by the debtor in agreement with the creditor due to the previous ones being at risk of bouncing.
So whenever you are about to stamp your signature on a cheque make sure that it does not bounce and if it does, make sure it does not come back to crush you!
Note: All case law cited here is available upon request.