Case example:

Ani and Budi are business partners. Ani and Budi have entered into a loan agreement where Ani lends Rp10,000,000 to Budi. Budi must repay the loan by the agreed period in the loan agreement. At the loan’s due date, Budi repaid the loan using two checks totaling Rp10,000,000. However, when Ani was going to cash the checks at the Bank, the Bank refused to cash the checks and found that the checks were blank.

Questions:

1. What is a blank check?
2. Can Ani still cash out the money?
3. What can Ani do after receiving the blank checks?
4. What would happen to Budi as the issuer of a blank check? 

Answers:

• What is a Blank Check?  

According to Circular Letter of the Bank of Indonesia Number 2/10/DASP of 2000 on Administration for Withdrawal of Blank Checks/Giro as amended several times as lastly by Circular Letter of the Bank of Indonesia Number 8/33/DASP of 2006 on the Third Amendment of Circular Letter of the Bank of Indonesia Number 2/10/DASP of 2000 on Administration for Withdrawal of Blank Checks/Giro (“SEBI 2/2000“), a Blank Check is a payment instrument in the form of a check which is rejected because the balance is insufficient, or the checking account/special account has been closed.

• Is It Possible for Ani to still cash out the money? 

It is to be noted that banks cannot accept all checks. The Bank must consider several things when a check is to be withdrawn by the check holder. Based on provisions on Letter A Section IV of SEBI 2/2000, a couple of reasons why a check could not be withdrawn at the request of the holder are: 

1. There is insufficient balance in the check issuer’s account; and/or 
2. The check issuer’s account has been closed (including closed at their request). 

When it is found that Ani’s checks come from a bank account with an insufficient balance or a closed account, then the Bank will not accept the Check. Therefore Ani cannot cash out the money. 

• What Can Ani Do After Receiving the Blank Checks? 

Under Indonesia’s prevailing laws and regulations, issuing a blank check is considered a criminal act of fraud. The criminal act of fraud by issuing a blank check was stipulated under Jurisprudence Number 5/Yur/Pid/2018 on Paying for Something by Check that Doesn’t Exist/with Insufficient Funds to Pay. Through the Jurisprudence, the Supreme Court of the Republic of Indonesia has ruled that “a person who submits a check, even though he/she knows that the check has no funds, then his/her actions are considered a ruse as referred to in Article 378 of the Criminal Code of the Republic of Indonesia (“Criminal Code“).” This decision has also been applied to similar crimes: Decision Number 1036K/Pid/1989 and 1006 K/Pid/2017. 

Article 378 of the Criminal Code stipulates that any person with the intent to benefit oneself unlawfully or another, either by assuming a false name or a false capacity, or by crafty deceits, or by a web of fictions, induces someone to deliver any property or to negotiate a loan or to annul a debt, shall, being guilty of fraud, be punished by a maximum imprisonment of four years.

Through this ruling, Ani can report Budi’s actions to the authorities, and the case will be processed through litigation. A key element that needs to be proven is that Budi had known beforehand that he didn’t have or had insufficient funds in his bank account when he issued the Check for Ani. 

Furthermore, from the civil law perspective, in the case where Budi failed to fulfill his obligation to repay the loan according to the provisions set in the loan agreement, Budi may have committed a breach of contract. 

Breach of contract, or default (wanprestasi), according to Prof. Subekti S.H., may be in the forms of:

1. the Debtor does not fulfill its obligation at all;
2. the Debtor is late in fulfilling its obligation;
3. the Debtor incorrectly or inappropriately fulfills its obligation;
4. performing something that is prohibited under the contract.

By issuing blank checks as the repayment of the loan to Ani, Budi does not fulfill his obligation as set under the loan agreement.

As the defaulted party, Ani may choose to: 1) demand the fulfillment of the obligation, in this case, is loan repayment; 2) demand compensation; 3) demand fulfillment of obligation with compensation; 4) terminate the obligation; and/or 5) terminate the obligation with compensation.

To exercise such rights, Ani may deliver a warning letter (somasi) to Budi to warn Budi to fulfill his obligation. If Budi does not heed the warning and does not fulfill his obligation, Ani may declare Budi in default through the warning letter. 

• What Would Happen to Budi as The Issuer of the Blank Check?

Apart from criminal sanction in the form of imprisonment and civil lawsuits, based on the provisions of Article 6 of Bank of Indonesia’s Board of Directors Decision Letter Number 28/122/KEP/DIR of 1996 on Blank Check (“SK BI 28/1996″), as the issuer of a Blank Check, Budi shall receive a warning letter once A tried to cash out the money. 

If Budi continues to issue blank checks in which: 

1. 3 (three) of the checks are cashed out within a 6 (six) months period; or 
2. A check with the amount of Rp1,000,000,000,- is cashed out, 

Then according to Article 9 of SK BI 28/1996, B’s account at the Bank shall be closed, and B’s name shall be included in the National Blacklist for one year. 

Legal Source

• Criminal Code of the Republic of Indonesia
• Bank of Indonesia’s Board of Directors Decision Letter Number 28/122/KEP/DIR of 1996 on Blank Check.
• Circular Letter of the Bank of Indonesia Number 2/10/DASP of 2000 on Administration for Withdrawal of Blank Checks/Giro as amended several times as lastly by Circular Letter of Bank Indonesia Number 8/33/DASP of 2006 on the Third Amendment of Circular Letter of Bank Indonesia Number 2/10/DASP of 2000 on Administration for Withdrawal of Blank Checks/Giro

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