Dishonor

Once your payment is processed and returned by the bank, DMV will automatically send you a Demand for Payment letter and will be unable to stop the dishonored check from occurring. However, if you are able to pay your fees (with another payment method) before your vehicle registration expires, you may be able to avoid penalties. The dishonored check service fee will still be due.

dishonor

1. Section 3-415 provides that an indorser is obliged to pay an instrument if the instrument is dishonored and is discharged if the indorser is entitled to notice of dishonor and notice is not given. Under Section 3-414, the drawer is obliged to pay an unaccepted draft if it is dishonored. The drawer, however, is not entitled to notice of dishonor except to the extent required in a case governed by Section 3-414(d). Part 5 tells when an instrument is dishonored ( Section 3-502) and what it means to give notice of dishonor ( Section 3-503). Often dishonor does not occur until presentment ( Section 3-501), and frequently presentment and notice of dishonor are excused ( Section 3-504).

2. In the great majority of cases presentment and notice of dishonor are waived with respect to notes. In most cases a formal demand for payment to the maker of the note is not contemplated. Rather, the maker is expected to send payment to the holder of the note on the date or dates on which payment is due. If payment is not made when due, the holder usually makes a demand for payment, but in the normal case in which presentment is waived, demand is irrelevant and the holder can proceed against indorsers when payment is not received. Under former Article 3, in the small minority of cases in which presentment and dishonor were not waived with respect to notes, the indorser was discharged from liability (former Section 3-502(1)(a)) unless the holder made presentment to the maker on the exact day the note was due (former Section 3-503(1)(c)) and gave notice of dishonor to the indorser before midnight of the third business day after dishonor (former Section 3-508(2)). These provisions are omitted from Revised Article 3 as inconsistent with practice which seldom involves face-to-face dealings.

3. Subsection (a) applies to notes. Subsection (a)(1) applies to notes payable on demand. Dishonor requires presentment, and dishonor occurs if payment is not made on the day of presentment. There is no change from previous Article 3. Subsection (a)(2) applies to notes payable at a definite time if the note is payable at or through a bank or, by its terms, presentment is required. Dishonor requires presentment, and dishonor occurs if payment is not made on the due date or the day of presentment if presentment is made after the due date. Subsection (a)(3) applies to all other notes. If the note is not paid on its due date it is dishonored. This allows holders to collect notes in ways that make sense commercially without having to be concerned about a formal presentment on a given day.

Subsection (b)(3) and (4) applies to time drafts. An unaccepted time draft differs from a time note. The maker of a note knows that the note has been issued, but the drawee of a draft may not know that a draft has been drawn on it. Thus, with respect to drafts, presentment for payment or acceptance is required. Subsection (b)(3) applies to drafts payable on a date stated in the draft. Dishonor occurs if presentment for payment is made and payment is not made on the day the draft becomes payable or the day of presentment if presentment is made after the due date. The holder of an unaccepted draft payable on a stated date has the option of presenting the draft for acceptance before the day the draft becomes payable to establish whether the drawee is willing to assume liability by accepting. Under subsection (b)(3)(ii) dishonor occurs when the draft is presented and not accepted. Subsection (b)(4) applies to unaccepted drafts payable on elapse of a period of time after sight or acceptance. If the draft is payable 30 days after sight, the draft must be presented for acceptance to start the running of the 30-day period. Dishonor occurs if it is not accepted. The rules in subsection (b)(3) and (4) follow former Section 3-501(1)(a).

7. Subsection (e) is a limitation on subsection (a)(1) and (2), subsection (b), subsection (c), and subsection (d). Each of those provisions states dishonor as occurring after presentment. If presentment is excused under Section 3-504, dishonor occurs under those provisions without presentment if the instrument is not duly accepted or paid.

8. Under subsection (b)(3)(ii) and (4) if a draft is presented for acceptance and the draft is not accepted on the day of presentment, there is dishonor. But after dishonor, the holder may consent to late acceptance. In that case, under subsection (f), the late acceptance cures the dishonor. The draft is treated as never having been dishonored. If the draft is subsequently presented for payment and payment is refused dishonor occurs at that time.

Protest is no longer mandatory and must be requested by the holder. Even if requested, protest is not a condition to the liability of indorsers or drawers. Protest is a service provided by the banking system to establish that dishonor has occurred. Like other services provided by the banking system, it will be available if market incentives, interbank agreements, or governmental regulations require it, but liabilities of parties no longer rest on it. Protest may be a requirement for liability on international drafts governed by foreign law which this Article cannot affect.

3501. (a) "Presentment" means a demand made by or on behalf of aperson entitled to enforce an instrument (1) to pay the instrumentmade to the drawee or a party obliged to pay the instrument or, inthe case of a note or accepted draft payable at a bank, to the bank,or (2) to accept a draft made to the drawee. (b) The following rules are subject to Division 4 (commencing withSection 4101), agreement of the parties, and clearinghouse rules andthe like: (1) Presentment may be made at the place of payment of theinstrument and shall be made at the place of payment if theinstrument is payable at a bank in the United States; may be made byany commercially reasonable means, including an oral, written, orelectronic communication; is effective when the demand for payment oracceptance is received by the person to whom presentment is made;and is effective if made to any one of two or more makers, acceptors,drawees, or other payors. (2) Upon demand of the person to whom presentment is made, theperson making presentment shall (A) exhibit the instrument, (B) givereasonable identification and, if presentment is made on behalf ofanother person, reasonable evidence of authority to do so, and (C)sign a receipt on the instrument for any payment made or surrenderthe instrument if full payment is made. (3) Without dishonoring the instrument, the party to whompresentment is made may (A) return the instrument for lack of anecessary indorsement, or (B) refuse payment or acceptance forfailure of the presentment to comply with the terms of theinstrument, an agreement of the parties, or other applicable law orrule. (4) The party to whom presentment is made may treat presentment asoccurring on the next business day after the day of presentment ifthe party to whom presentment is made has established a cutoff hournot earlier than 2 p.m. for the receipt and processing of instrumentspresented for payment or acceptance and presentment is made afterthe cutoff hour.3502. (a) Dishonor of a note is governed by the following rules: (1) If the note is payable on demand, the note is dishonored ifpresentment is duly made to the maker and the note is not paid on theday of presentment. (2) If the note is not payable on demand and is payable at orthrough a bank or the terms of the note require presentment, the noteis dishonored if presentment is duly made and the note is not paidon the day it becomes payable or the day of presentment, whichever islater. (3) If the note is not payable on demand and paragraph (2) doesnot apply, the note is dishonored if it is not paid on the day itbecomes payable. (b) Dishonor of an unaccepted draft other than a documentary draftis governed by the following rules: (1) If a check is duly presented for payment to the payor bankotherwise than for immediate payment over the counter, the check isdishonored if the payor bank makes timely return of the check orsends timely notice of dishonor or nonpayment under Section 4301 or4302, or becomes accountable for the amount of the check underSection 4302. (2) If a draft is payable on demand and paragraph (1) does notapply, the draft is dishonored if presentment for payment is dulymade to the drawee and the draft is not paid on the day ofpresentment. (3) If a draft is payable on a date stated in the draft, the draftis dishonored if (A) presentment for payment is duly made to thedrawee and payment is not made on the day the draft becomes payableor the day of presentment, whichever is later, or (B) presentment foracceptance is duly made before the day the draft becomes payable andthe draft is not accepted on the day of presentment. (4) If a draft is payable on elapse of a period of time aftersight or acceptance, the draft is dishonored if presentment foracceptance is duly made and the draft is not accepted on the day ofpresentment. (c) Dishonor of an unaccepted documentary draft occurs accordingto the rules stated in paragraphs (2), (3), and (4) of subdivision(b), except that payment or acceptance may be delayed withoutdishonor until no later than the close of the third business day ofthe drawee following the day on which payment or acceptance isrequired by those paragraphs. (d) Dishonor of an accepted draft is governed by the followingrules: (1) If the draft is payable on demand, the draft is dishonored ifpresentment for payment is duly made to the acceptor and the draft isnot paid on the day of presentment. (2) If the draft is not payable on demand, the draft is dishonoredif presentment for payment is duly made to the acceptor and paymentis not made on the day it becomes payable or the day of presentment,whichever is later. (e) In any case in which presentment is otherwise required fordishonor under this section and presentment is excused under Section3504, dishonor occurs without presentment if the instrument is notduly accepted or paid. (f) If a draft is dishonored because timely acceptance of thedraft was not made and the person entitled to demand acceptanceconsents to a late acceptance, from the time of acceptance the draftis treated as never having been dishonored.3503. (a) The obligation of an indorser stated in subdivision (a)of Section 3415 and the obligation of a drawer stated in subdivision(d) of Section 3414 may not be enforced unless (1) the indorser ordrawer is given notice of dishonor of the instrument complying withthis section or (2) notice of dishonor is excused under subdivision(b) of Section 3504. (b) Notice of dishonor may be given by any person; may be given byany commercially reasonable means, including an oral, written, orelectronic communication; and is sufficient if it reasonablyidentifies the instrument and indicates that the instrument has beendishonored or has not been paid or accepted. Return of an instrumentgiven to a bank for collection is sufficient notice of dishonor. (c) Subject to subdivision (c) of Section 3504, with respect to aninstrument taken for collection by a collecting bank, notice ofdishonor shall be given (1) by the bank before midnight of the nextbanking day following the banking day on which the bank receivesnotice of dishonor of the instrument, or (2) by any other personwithin 30 days following the day on which the person receives noticeof dishonor. With respect to any other instrument, notice ofdishonor shall be given within 30 days following the day on whichdishonor occurs.3504. (a) Presentment for payment or acceptance of an instrument isexcused if (1) the person entitled to present the instrument cannotwith reasonable diligence make presentment, (2) the maker or acceptorhas repudiated an obligation to pay the instrument or is dead or ininsolvency proceedings, (3) by the terms of the instrumentpresentment is not necessary to enforce the obligation of indorsersor the drawer, (4) the drawer or indorser whose obligation is beingenforced has waived presentment or otherwise has no reason to expector right to require that the instrument be paid or accepted, or (5)the drawer instructed the drawee not to pay or accept the draft orthe drawee was not obligated to the drawer to pay the draft. (b) Notice of dishonor is excused if (1) by the terms of theinstrument notice of dishonor is not necessary to enforce theobligation of a party to pay the instrument, or (2) the party whoseobligation is being enforced waived notice of dishonor. A waiver ofpresentment is also a waiver of notice of dishonor. (c) Delay in giving notice of dishonor is excused if the delay wascaused by circumstances beyond the control of the person giving thenotice and the person giving the notice exercised reasonablediligence after the cause of the delay ceased to operate.3505. (a) The following are admissible as evidence and create apresumption of dishonor and of any notice of dishonor stated: (1) A document regular in form as provided in subdivision (b)which purports to be a protest. (2) A purported stamp or writing of the drawee, payor bank, orpresenting bank on or accompanying the instrument stating thatacceptance or payment has been refused unless reasons for the refusalare stated and the reasons are not consistent with dishonor. (3) A book or record of the drawee, payor bank, or collectingbank, kept in the usual course of business which shows dishonor, evenif there is no evidence of who made the entry. (b) A protest is a certificate of dishonor made by a United Statesconsul or vice consul, or a notary public or other person authorizedto administer oaths by the law of the place where dishonor occurs.It may be made upon information satisfactory to that person. Theprotest shall identify the instrument and certify either thatpresentment has been made or, if not made, the reason why it was notmade, and that the instrument has been dishonored by nonacceptance ornonpayment. The protest may also certify that notice of dishonorhas been given to some or all parties.Disclaimer: These codes may not be the most recent version. California may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources. 041b061a72