Dishonor

DEFINITION of 'Dishonor'

The action of refusing to fulfill contractual obligations or pay a charge. Dishonoring a transaction can occur if a seller does not deliver the goods or when the buyer does not provide payment. In contracts, a party may dishonor the agreement by altering the specifications, delivering late payment or goods, or failing to act on their required duties.

BREAKING DOWN 'Dishonor'

When a party has broken an agreement or promise, they are said to be dishonored. In most cases, dishonoring a contract may result in the other party terminating its obligations.

For example, let's say you pay a monthly fee for a telephone service. If you were unhappy with the service and refused to pay the fee, you would be dishonoring the contract. The phone company will likely cut off your service (terminating your contract) until you produce payment.

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