A delay in payment or a refusal to pay an instrument when it is returned because it lacks a proper indorsement is a dishonor of the instrument.

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A dishonor of an instrument occurs when it is presented for payment and payment is refused or cannot be obtained, not because it lacks a proper indorsement. Lack of a proper indorsement might prevent the instrument from being negotiated further, but it is not a reason for dishonor related to payment.

A Delay in Payment or a Refusal to Pay an Instrument