Dishonor

Dishonor occurs when a financial instrument, such as a check or promissory note, is not paid or accepted when presented for payment. This can happen when the issuer of the check has insufficient funds, or if a promissory note is not honored by the due date. Dishonoring a financial obligation can lead to legal consequences, damaged credit, and penalties. In banking, dishonored checks are typically returned to the issuer, and the bank may charge a fee. In broader financial terms, dishonor represents a failure to meet a payment obligation, which can lead to breach of contract claims.

Example

A person writes a check for more than the amount in their bank account, and the bank returns the check as dishonored due to insufficient funds.