The document discusses key definitions and concepts related to negotiable instruments law, including consideration, holders for value, and accommodation parties. It also addresses issues like failure of consideration and the liability of makers and accommodation parties. Specifically:
1) Consideration is a benefit bargained for between parties that is the essential reason for entering a contract. An accommodation party signs without receiving value, to lend their name to another.
2) Makers are liable even without consideration between themselves and the payee, but can assert defenses against non-holders in due course. Failure of consideration allows makers to only recover the value received.
3) The document addresses issues like a holder collecting on a note subject to defenses, and
The document discusses key definitions and concepts related to negotiable instruments law, including consideration, holders for value, and accommodation parties. It also addresses issues like failure of consideration and the liability of makers and accommodation parties. Specifically:
1) Consideration is a benefit bargained for between parties that is the essential reason for entering a contract. An accommodation party signs without receiving value, to lend their name to another.
2) Makers are liable even without consideration between themselves and the payee, but can assert defenses against non-holders in due course. Failure of consideration allows makers to only recover the value received.
3) The document addresses issues like a holder collecting on a note subject to defenses, and
The document discusses key definitions and concepts related to negotiable instruments law, including consideration, holders for value, and accommodation parties. It also addresses issues like failure of consideration and the liability of makers and accommodation parties. Specifically:
1) Consideration is a benefit bargained for between parties that is the essential reason for entering a contract. An accommodation party signs without receiving value, to lend their name to another.
2) Makers are liable even without consideration between themselves and the payee, but can assert defenses against non-holders in due course. Failure of consideration allows makers to only recover the value received.
3) The document addresses issues like a holder collecting on a note subject to defenses, and
The document discusses key definitions and concepts related to negotiable instruments law, including consideration, holders for value, and accommodation parties. It also addresses issues like failure of consideration and the liability of makers and accommodation parties. Specifically:
1) Consideration is a benefit bargained for between parties that is the essential reason for entering a contract. An accommodation party signs without receiving value, to lend their name to another.
2) Makers are liable even without consideration between themselves and the payee, but can assert defenses against non-holders in due course. Failure of consideration allows makers to only recover the value received.
3) The document addresses issues like a holder collecting on a note subject to defenses, and
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BL 3 – LAW ON BUSINESS NEGOTIABLE INSTRUMENTS
FINAL EXAM
I. Definitions 1. Consideration
payment or money; a vital element in the law of contracts, consideration is a benefit which must be bargained for between the parties, and is the essential reason for a party entering into a contract. 2. Holder for Value One who gives valuable consideration for an instrument issued or negotiated to him is a holder for value 3. Accomodation Party
An accomodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. 4. Failure Consideration A failure of consideration occurs if one of the parties in a contract fails. Specifically, it occurs if they fail to fulfill their end of the deal. In a contract, a party trades something of value in exchange for consideration. When there is a failure of consideration, it means that the consideration ceased to be sufficient.
II. Discussions 1. State the liability of an accommodation party on an instrument. Under Section 29, an accommodation party is liable on the instrument even in the absence of consideration between him and the accommodated party even though the holder of the instrument knew him to be only an accommodation party. 2. Give two presumptions that under the law arise from issue of a negotiable instrument. (1) prima facie to have been issued for a valuable consideration (2) that every person whose signature appears thereon has become a party thereto for value. State the liability of a maker of a promissory note when there is: (a) absence of consideration; 3. (b) failure of consideration for the note. (a) Absence of consideration – The note would not be recovered between the maker and the payee but the maker will be liable between him and a holder in due course because absence of consideration is not a personal defense against the latter. (b) Failure of consideration for the note – the maker is liable only to the extent of consideration delivered to him known as partial failure of consideration otherwise the payee could not recover if the consideration is not complied with. III. Problems - He can collect the P12,000 and apply it to X’s debt and deliver the surplus to him under Section 27 as Y is deemed a holder for value to the extent of his lien. - If the note is subject to personal defenses, Y can only collect 10,000. 1. - If the note is subject to real defenses, Y cannot collect anything. Z is deemed a holder for value in respect to all parties who become such prior to that time because there is value given for the instrument consistent with what is stated in Section 26. If Z is a holder in due course, he may enforce the payment in full against W, X and Y. If Z is not a holder in due course, W can 2. set up the defense of absence of consideration. X may enforce payment from W if W has an antecedent or pre-existing debt. The payment of debt is 3. sufficient to be a valuable consideration and the debt may be that of a third party.
