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Business Definition for: wrongful dishonor
Dictionary of Banking Terms
wrongful dishonor

failure to pay a check or draft properly endorsed and presented for payment. Under the Uniform Commercial Code (UCC) , the payer bank has until midnight of the day after it receives a check to pay or dishonor it. A bank may return a check with a missing signature, altered date, and so on, without penalty. If, however, the drawee the person presenting the check) suffers financially becauseof the bank's refusal to honor an otherwise payable check, the bankmay be liable to its customer for damages. The customer must still be able to prove financial harm.

See also protest
Related Terms:
protest

formal notice that a bank has refused to pay a check or other negotiable instrument properly and legally presented for payment. Protest is a means of legally proving that presentment was made, but rarely is used. Modern banking systems provide a sufficient audit trail to verify the conditions under which presentment was made.When a check is dishonored by the drawee bank, it can be presented a second time by a notary public or other public official. If the drawee bank still refuses to pay, an official statement is attached to the instrument,legally certifying that presentment was made and that the instrument was dishonored.

Referring Terms:
negotiable instrument
Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
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