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presentment has been excused and the instrument is past due and unpaid.The presenting party then has recourse against the indorsers or othersecondary parties.Example 8. A note was presented to Charro for payment on thedue date. Charro refused to honor it, claiming the note was a forgery.The holder would have to proceed against the indorsers toobtain payment. The note is considered dishonored because ofCharro’s refusal to pay it.Notice of Dishonor Obligations of indorsers and drawers of instrumentscannot be enforced unless the indorsers and drawers are givennotice of the dishonor. Notice of dishonor may be given by any reasonablemeans, including oral, written, or electronic communication,and is sufficient if it identifies the instrument and indicates that theinstrument has been dishonored or has not been paid or accepted. Thereturn of an instrument given to a bank for collection is sufficient noticeof dishonor.Holders other than banks must give notice of the dishonor to thedrawer and indorsers within 30 days following the day of dishonor.Banks taking instruments for collection must give notice before midnightof the banking day following the day the bank was notified of thedishonor. Delay in giving notice of dishonor is excused when the holderhas acted carefully and the delay is due to circumstances beyond theholder’s control. Presentment and notice of dishonor are also excusedwhen the party waived the right to presentment or notice of dishonor.A negotiable instrumentis an object that can beused to do business. Theterm negotiate comesfrom the Latin termnegotiari, which means“to do business.”Reviewing What You Learned1. What is primary liability? What parties areprimarily liable on negotiable instruments?2. What is secondary liability? What partiesare secondarily liable on negotiableinstruments?Critical Thinking ActivityEnforcing Obligations Why do you think thatthe obligations of indorsers and drawers ofinstruments may not be enforced unless theyare given notice of the dishonor?Legal Skills in ActionTaking Precautions The local video storeaccepts checks for renting and purchasingvideos and DVDs. Recently, the store hasaccepted many bad checks. As a team, createa document listing the precautions the storeclerks might take to be sure that they willcollect the funds.Chapter 26: Collecting Negotiable Instruments 571