Definition of Wrongful dishonor:
The term wrongful dishonor refers to a bank's failure to honor a valid negotiable instrument such as a check or draft that has been presented to it for payment. If the instrument is valid and there are enough funds to cover it, a bank's failure to honor the instrument within the time period stipulated by the Uniform Commercial Code (UCC) would constitute wrongful dishonor.
Failure of a bank to honor a valid and payable bill of exchange or negotiable instrument within a statutory period (usually until midnight of the day of presentment). If the banks customer (drawee or drawer) suffers provable harm, the bank may be liable for damages.
The Uniform Commercial Code is a set of laws and regulations that outline how to conduct business. The code was created and adopted to help make it easier for companies to do business across state lines. The code contains nine articles that cover things like general provisions, letters of credit, the sale of goods and services, and investment securities. The fourth article covers checks, drafts, and other negotiable instruments.
How to use Wrongful dishonor in a sentence?
- Dishonor refers to a check or draft presented to a bank by a party with insufficient funds.
- Wrongful dishonor occurs when a bank or credit union fails to honor a valid check or draft sent to it.
- A bank is liable for its mistake if it is proved that wrongful dishonor has occurred on its watch.
Meaning of Wrongful dishonor & Wrongful dishonor Definition