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    Quiz 1

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    Andrei Arkov
    1. Certain instruments can qualify as negotiable instruments under the Negotiable Instruments Law including postal money orders, certificates of deposit, and treasury warrants payable from a specific fund. Letters of credit and warehouse receipts do not qualify. 2. Features like an interest term or payment option that do not invalidate the promise to pay do not affect negotiability of a promissory note. An option for payment in goods or services instead of money, or an option for an alternative performance would affect negotiability. 3. A promissory note that provides multiple payment options to the maker including payment in money or cement or authorizing the sale of a house is not negotiable because it does not contain

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    Quiz 1

    Uploaded by

    Andrei Arkov
    224 views2 pages
    1. Certain instruments can qualify as negotiable instruments under the Negotiable Instruments Law including postal money orders, certificates of deposit, and treasury warrants payable from a specific fund. Letters of credit and warehouse receipts do not qualify. 2. Features like an interest term or payment option that do not invalidate the promise to pay do not affect negotiability of a promissory note. An option for payment in goods or services instead of money, or an option for an alternative performance would affect negotiability. 3. A promissory note that provides multiple payment options to the maker including payment in money or cement or authorizing the sale of a house is not negotiable because it does not contain

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    1. Certain instruments can qualify as negotiable instruments under the Negotiable Instruments Law including postal money orders, certificates of deposit, and treasury warrants payable from a specific fund. Letters of credit and warehouse receipts do not qualify. 2. Features like an interest term or payment option that do not invalidate the promise to pay do not affect negotiability of a promissory note. An option for payment in goods or services instead of money, or an option for an alternative performance would affect negotiability. 3. A promissory note that provides multiple payment options to the maker including payment in money or cement or authorizing the sale of a house is not negotiable because it does not contain

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    224 views2 pages

    Quiz 1

    Uploaded by

    Andrei Arkov
    1. Certain instruments can qualify as negotiable instruments under the Negotiable Instruments Law including postal money orders, certificates of deposit, and treasury warrants payable from a specific fund. Letters of credit and warehouse receipts do not qualify. 2. Features like an interest term or payment option that do not invalidate the promise to pay do not affect negotiability of a promissory note. An option for payment in goods or services instead of money, or an option for an alternative performance would affect negotiability. 3. A promissory note that provides multiple payment options to the maker including payment in money or cement or authorizing the sale of a house is not negotiable because it does not contain

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    1.

    State and explain whether the following are negotiable instruments under the Negotiable Instruments Law:
    a) Postal Money Order
    b) A certificate of time deposit which states “This is to certify that bearer has deposited in this bank the
    sum of FOUR THOUSAND PESOS (P4,000) only, repayable to the depositor 200 days after date.”
    c) Letters of Credit
    d) Warehouse Receipts
    e) Treasury warrants payable from a specific fund
    f) Certificate of Indebtedness
    g) Electronic messages

    2. Which of the following stipulations or features of a promissory note (PN) affect or do not affect its
    negotiability, assuming that the PN is otherwise negotiable? Indicate your answer by writing the paragraph
    number of the stipulation or feature of the PN as shown below and your corresponding answer, either
    ―Affected or ―Not affected. Explain.
    a) The date of the PN is ―February 30, 2002.
    b) The PN bears interest payable on the last day of each calendar quarter at a rate equal to five
    percent (5%) above the then prevailing 91-day Treasury Bill rate as published at the beginning
    of such calendar quarter.
    c) The PN gives the maker the option to make payment either in money or in quantity of palay or
    equivalent value.
    d) The PN gives the holder the option either to require payment in money or to require the
    maker to serve as the bodyguard or escort of the holder for 30 days.
    3. A writes a promissory note in favor of his creditor, B. It says: “Subject to my option, I promise to pay B
    Php1 Million or his order or give Php1 Million worth of cement or to authorize him to sell my house worth
    Php1 Million. Signed, A.” Is the note negotiable? Explain.
    4. Indicate and explain whether the promissory note is negotiable or non-negotiable.
    a) I promise to pay A or bearer Php100,000.00 from my inheritance which I will get after the death of
    my father.
    b) I promise to pay A or bearer Php100,000 plus the interest rate of ninety (90) – day treasury bills.
    c) I promise to pay A or bearer the sum of Php100,000 if A passes the 2012 bar exams.
    d) I promise to pay A or bearer the sum of Php100.000 on or before December 30, 2012.
    e) I promise to pay A or bearer the sum of Php100,000.
    5. Define Acceleration clause and illustrate it by making a promissory a note.
    6. Using the requisites under section 1 of Negotiable Instruments Law, give 1 example of a bearer instrument
    and 1 example of an order instrument.
    7. Is the word order or promise essential for the instrument to be negotiable?
    8. Define Forgery. What is the effect of “Forgery”?
    9. What are the requisites of NI?
    10.  Mario Guzman issued to Honesto Santos a check for P50th aspayment for a 2nd hand car. Without the
    knowledge of Mario,Honesto changed the amount to P150th which alteration couldnot be detected by the
    naked eye. Honesto deposited thealtered check with Shure Bank which forwarded the same toProgressive
    Bank for payment. Progressive Bank without noticingthe alteration paid the check, debiting P150th from the
    accountof Mario. Honesto withdrew the amount of P15th from Shure Bank and disappeared. After receiving
    his bank statement, Mariodiscovered the alteration and demanded restitution fromProgressive Bank. Discuss
    fully the rights and the liabilities of theparties concerned.
    11. M makes a promissory note that states: "I, M, promise to pay Php5,000.00 to B or bearer. Signed, M." M
    negotiated the note by delivery to B, B to N, and N to O. B had known that M was bankrupt when M issued
    the note. Who would be liable to O? Explain.
    12. X executed a promissory note with a face value of Php50,000.00, payable to the order of Y. Y indorsed
    the note to Z, to whom Y owed Php30,000.00. If X has no defense at all against Y, for how much may Z
    collect from X? Explain.
    13. X is the holder of an instrument payable to him (X) or his order, with Y as maker. X then indorsed it as
    follows: "Subject to no recourse, pay to Z. Signed, X." When Z went to collect from Y, it turned out that Y's
    signature was forged. Z now sues X for collection. Will it prosper? Explain.
    14. A bill of exchange has T for its drawee, U as drawer, and F as holder. When F went to T for presentment,
    F learned that T is only 15 years old. F wants to recover from U but the latter insists that a notice of dishonor
    must first be made, the instrument being a bill of exchange. Is he correct?Explain.
    15. D, debtor of C, wrote a promissory note payable to the order of C. C's brother, M, misrepresenting himself
    as C’s agent, obtained the note from D, then negotiated it to N after forging C's signature. N indorsed it to E,
    who indorsed it to F, a holder in due course. May F recover from E? Explain.

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