Wrongful Dishonor

Wrongful Dishonor

The failure or refusal by a bank to pay a check that is properly printed and endorsed. If the bank wrongfully dishonors a check and the check writer suffers financial hardship, the writer may sue for damages.
References in periodicals archive ?
If the bank rejects a beneficiary's presentation of conforming documents, the bank is in breach of its obligation to pay on the letter of credit and is subject to the beneficiary's assertion of a wrongful dishonor claim.
The court addressed the beneficiary's wrongful dishonor claim against the letter of credit issuing bank.
The court noted that the Beneficiary could prove its wrongful dishonor claim by showing an issued and outstanding letter of credit, the Beneficiary's timely presentation of the documents required by the letter of credit, and the issuing bank's refusal to pay the Beneficiary's compliant drawing.
The Beneficiary was also awarded payment of its reasonable attorneys' fees as the prevailing party in its wrongful dishonor action.
The letter of credit beneficiary had sued the letter of credit issuing bank for wrongful dishonor of the beneficiary's documentary presentation and demand for payment under the letter of credit.
The court also held that Amwest, as the prevailing party in a wrongful dishonor litigation, was entitled to recover its reasonable attorneys' fees and other litigation expenses from Concord, as allowed by UCC Article 5.
Otherwise, Lifestyle would have a claim against BNY for wrongful dishonor of the letter of credit since a letter of credit issuing bank is required to make payment to a beneficiary that presents all of the documents required under the letter of credit.
Ultimately, a lawsuit was started against Hamilton for wrongful dishonor of the LC.