Ohio Notary Practice Exam

When is a notice of dishonor made?

1. After a payment is refused on the due date

2. When a payment is made in full

3. Before the document is signed

4. Once the document is acknowledged by a notary

The correct answer is: After a payment is refused on the due date

A notice of dishonor is made when a payment is refused on the due date of the financial obligation. This formal notification indicates that the payment has not been fulfilled as expected, which can have significant implications for both the creditor and debtor. It serves as an important legal document, as it establishes that the debtor has defaulted on their obligation. In most circumstances, if a payment is refused or is not made by the due date, the creditor must provide written notice to the debtor, which is referred to as a notice of dishonor. This notice is crucial, as it may also trigger further legal actions, such as the collection process. Other options address different scenarios that do not pertain to the specific act of issuing a notice of dishonor. For instance, a payment being made in full does not constitute dishonor, nor does the timing of signing a document influence the status of a payment obligation. Furthermore, acknowledgment by a notary relates to the verification of a signature, which is separate from the financial obligations involved in a transaction. Hence, the act of issuing a notice of dishonor is specifically linked to the refusal of payment when it is due, making this answer the most accurate.