Negotiable Instruments Law - Philippines

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  • Topic: Negotiable instrument, Promissory note, Bearer instrument
  • Pages : 19 (4564 words )
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  • Published : February 12, 2013
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NEGOTIABLE INSTRUMENTS LAW

NEGOTIABLE INSTRUMENT
Written contract for the payment of money, by its form intended as substitute for money and intended to pass from hand to hand to give the holder in due course the right to hold the same and collect the sum due

PROMISSORY NOTE

• unconditional promise in writing made by one person to another signed by the maker • engaging to pay on demand, or at a fixed or determinable future time a sum certain in money to order or to bearer • where a note is drawn to the maker’s own order, it is not complete until indorsed by him

BILL OF EXCHANGE

• unconditional order in writing addressed by one person to another signed by the person giving it • requiring the person to whom it’s addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer

• Check: bill of exchange drawn on a bank payable on demand.

Kinds of checks:
1. personal check
2. manager’s/cashier’s check – drawn by a bank on itself. Issuance has the effect of acceptance 3. memorandum check – “memo” is written across its face, signifying that drawer will pay holder absolutely without need of presentment 4. crossed check –

Effects:
a. check may not be encashed but only deposited in bank b. may be negotiated only once, to one who has an acct. with a bank c. warning to holder that check has been issued for a definite purpose so that he must inquire if he received check pursuant to such purpose, otherwise not HDC Kinds:

a. general (no word between lines, or “co” between lines) b. special (name of bank appearing between parallel lines)

BEARER
Person in possession of a bill/note payable to bearer

HOLDER
Payee or indorsee of a bill or note who is in possession of it, or the bearer thereof.

THE LIFE OF A NEGOTIABLE INSTRUMENT:
1. issue
2. negotiation
3. presentment for acceptance in certain bills
4. acceptance
5. dishonor by on acceptance
6. presentment for payment
7. dishonor by nonpayment
8. notice of dishonor
9. protest in certain cases
10. discharge

NEGOTIABILITY

REQUISITES

1. in writing and signed by maker or drawer
• no person liable on the instrument whose signature does not appear thereon ( subject to exceptions) • one who signs in a trade or assumed name liable to the same extent as if he had signed in his own name • signature of any party may be made by a duly authorized agent, no particular form of appt. necessary

2. unconditional promise or order to pay
• unqualified order or promise to pay is unconditional though coupled with a. an indication of a particular fund out of which reimbursement to be made, or a particular account to be debited with amount, or b. a statement of the transaction which gives rise to the instrument • an order or promise to pay out of a particular fund is not unconditional

a sum certain in money
• even if stipulated to be paid---
a. with interest, or
b. by stated installments, or
c. by stated installments with a provision that upon default in payment of any installment/interest, the whole shall become due, or d. with exchange, whether at a fixed rate or at the current rate, or e. with costs of collection or an attorney’s fee, in case payment not made at maturity (liquidated damages)

3. payable on demand,
• when expressed to be payable on demand, or at sight, or on presentation; • when no time for payment expressed, or
• where an instrument is issued, accepted or indorsed when overdue, it is, as regards the person so issuing, accepting, or indorsing it, payable on demand

or at a fixed or determinable future time
• when it’s expressed to be payable at a fixed period after date or sight, or • on or before a fixed or determinable future time fixed therein, or • on or...
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