Key Takeaways
- A protest is a formal declaration that a negotiable instrument was dishonored
- Used for bills of exchange, promissory notes, and checks
- Rarely performed in modern practice
- Creates official record of dishonor for legal purposes
- Specific notice requirements apply
Protests of Negotiable Instruments
In the 1800s, a merchant in San Francisco received a promissory note from a debtor in New York. When the note came due and the debtor refused to pay, the merchant needed an official record of the refusal to pursue legal action against the note's endorsers. He went to a notary public who performed a "protest"—a formal declaration of dishonor.
Today, this scenario is almost unheard of. But protests remain part of California notary law and may appear on your exam.
What Is a Protest?
A protest is a formal declaration by a notary public that:
| Element | Description |
|---|---|
| Instrument presented | A negotiable instrument was presented for payment |
| Payment refused | The payer declined to pay ("dishonored" the instrument) |
| Rights preserved | The holder's legal rights against endorsers are protected |
Think of a protest as the notary saying: "I officially witness and declare that this person tried to get paid but was refused."
Negotiable Instruments: What Can Be Protested?
| Instrument | Definition | Example |
|---|---|---|
| Check | Order to a bank to pay a specific amount | Personal check |
| Promissory note | Written promise to pay a certain amount | Loan agreement |
| Bill of exchange | Order directing a third party to pay | International trade documents |
| Draft | Similar to a check, drawn on banks or others | Bank draft |
All of these are "negotiable"—meaning they can be transferred from one person to another.
The Historical Purpose of Protests
Before modern banking, protests served essential purposes:
| Purpose | Explanation |
|---|---|
| Official record | Creates evidence that payment was demanded and refused |
| Preserve rights | Holder must protest to hold endorsers liable |
| Legal evidence | Provides proof for court proceedings |
| Notice trigger | Starts the clock for notifying responsible parties |
Who Are "Endorsers"?
When a negotiable instrument is transferred, each person who signs the back (endorses it) becomes potentially liable if the original maker doesn't pay:
Example:
- Alice writes a promissory note promising to pay $1,000
- Bob receives the note and endorses it to Carol
- Carol endorses it to Dave
- Alice refuses to pay Dave
- Dave protests the dishonor and can now pursue Bob and Carol (the endorsers) for payment
Modern Relevance: Why Protests Are Rare
| Reason | Explanation |
|---|---|
| Electronic banking | Most payments are now electronic—no paper to protest |
| Bank handling | Banks process dishonored checks internally |
| Legal evolution | Commercial law provides other remedies |
| Alternative proof | Bank records serve as evidence of dishonor |
| Rare demand | Attorneys rarely request protests |
Reality check: You will probably never be asked to perform a protest during your notary career. But you should know what one is for the exam.
Basic Protest Procedure
If someone does request a protest (extremely unlikely):
| Step | Action |
|---|---|
| 1 | Examine the negotiable instrument |
| 2 | Note the date of presentment and dishonor |
| 3 | Prepare a formal protest certificate |
| 4 | Provide notice to responsible parties (maker, endorsers) |
| 5 | Charge the appropriate fee |
Protest Certificate Elements
If you ever prepare a protest certificate, it includes:
| Element | What to Include |
|---|---|
| Description of instrument | Type, amount, date, parties |
| Date of presentment | When payment was demanded |
| Statement of dishonor | That payment was demanded and refused |
| Reason for dishonor | If given (e.g., "insufficient funds") |
| Notary credentials | Signature, seal, commission info |
Protest vs. Other Notarial Acts
| Feature | Protest | Acknowledgment | Jurat |
|---|---|---|---|
| Frequency | Extremely rare | Very common | Common |
| Purpose | Record dishonor | Verify signature | Verify oath |
| Documents | Negotiable instruments | Deeds, POAs | Affidavits |
| Signing | N/A | Not required in presence | Required in presence |
On the Exam
Expect 1 question on protests. Key points tested:
- Definition: Formal declaration of dishonored negotiable instrument
- Modern use: RARELY performed today
- Instruments: Checks, promissory notes, bills of exchange
- Purpose: Preserve holder's rights against endorsers
- Not to be confused with: Objecting to a notarization or filing a complaint
What is a protest in the context of notary duties?
How often are protests performed in modern notary practice?