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Negotiable Instruments Memo Aid390935500
Negotiable Instruments Memo Aid390935500
Negotiable Instruments Memo Aid390935500
6
MEMORY AID IN COMMERCIAL LAW
NEGOTIABLE INSTRUMENTS LAW (NIL)
(Act No. 2031, effective June 2, 1911)
RECEIPT
If originally payable If payable to
to bearer, it will bearer, it will be
always remain so converted into a
payable regardless of receipt deliverable
NEGOTIABLE NEGOTIABLE manner of to order, if
INSTRUMENT DOCUMENT OF indorsement. indorsed specially.
TITLE A holder in due The indorsee, even
course may obtain if holder in due
Subject is money Subject is goods
title better than that course, obtains
Is itself the The document is a
of the one who only such title as
property with mere evidence of
negotiated the the person who
value title – the things of
instrument to him. caused the deposit
value being the
had over the goods.
goods mentioned in
the document
ASSIGNMENT NEGOTIATION
Has all the Does not have these Pertains to contracts Pertains to NI
requisites of Sec. 1 requisites in general
of NIL Holder takes the Holder in due
A holder of NI may Intermediate parties instrument subject course takes it free
run after the are not secondarily to the defenses from personal
secondary parties liable if the obtaining among the defenses available
for payment if document is original parties among the parties
dishonored by the dishonored.
Governed by the Governed by the
party primarily
Civil Code NIL
liable.
A holder, if a A holder can never
holder in due acquire rights to the II. NEGOTIABILITY
course, may document better Form of NI: (Sec. 1) Key: WUPOA
acquire rights over than his 1. Must be in Writing and signed by the
the instrument predecessors. maker or drawer;
better than his
predecessors. 2. Must contain an Unconditional
promise or order to pay a sum
BILLOF EXCHANGE CHECK certain in money;
Not necessarily It is necessary that 3. Must be Payable on demand, or at a
drawn on a deposit. a check be drawn fixed or determinable future time;
The drawee need not on a bank deposit. 4. Must be payable to Order or to
be a bank Otherwise, there bearer; and
would be fraud.
5. When the instrument is addressed to
Death of a drawer of Death of the a drawee, he must be named or
a BOE, with the drawer of a check, otherwise indicated therein with
knowledge of the with the reasonable certainty.
bank, does not knowledge of the
revoke the authority bank, revokes the
of the drawee to authority of the Determination of negotiability:
pay. banker to pay. a. Whole instrument
May be presented for Must be presented b. What appears on the face of the
payment within for payment within instrument
reasonable time a reasonable time c. Requisites enumerated in Sec.1 of the
after its last after its issue. NIL
negotiation. d. Should contain words or terms of
negotiability. (Gopenco, Commercial
May be payable on Always payable on
demand or at a fixed demand Law Bar Reviewer, cited in Aquino, p.
or determinable 23)
future time
In determining the negotiability of an
NEGOTIABLE NEGOTIABLE instrument, the instrument in its
INSTRUMENT WAREHOUSE entirety and by what appears on its face
Documents, Timoteo
ACCELERATION INSECURITY EXTENSION B. Aquino)
CLAUSE CLAUSE CLAUSE
A clause that Provisions in Clauses in c. Payable on Demand or at fixed or
renders whole the contract the face of determinable future time
debt due and which the PAYABLE ON PAYABLE AT A
demandable allows the instrument DEMAND FIXED OR
upon failure of holder to that extend DETERMINABLE
obligor to accelerate the maturity FUTURE TIME
comply with payment if dates;
a. Where expressed a. At a fixed period
certain he deems a. At the
to be payable on after date or
conditions. himself option of
demand, at sight sight;
insecure. the holder;
or on b. On or before a
b. Extension
presentation; fixed or
to a further
b. Where no period determinable
definite
of payment is future time
time at the
stated; specified
option of
c. Where issued, therein; or
the maker
accepted, or c. On or at a fixed
or acceptor
indorsed after period after the
c. Automa –
maturity (only as occurrence of a
tically upon
between immediate specified event,
or after a
parties). (Sec. 7) which is certain to
specified
happen, though the
act or
time of happening is
event.
uncertain. (Sec. 4)
Instrument is Instrument Instrument
still negotiable is rendered is still
non- negotiable If the day and the month, but not the
negotiable (Notes and year of payment is given, it is not
because the Cases on negotiable due to its uncertainty.
holder’s Banks, (Pandect of Commercial Law and
whim and Negotiable Jurisprudence, Justice Jose Vitug, 1997
caprice Instruments ed.)
prevail and other
without the Commercial
fault and Documents,
d. Payable to Order or to Bearer
control of Timoteo B. Payable to Order
the maker Aquino) The instrument is payable to order
where it is drawn payable to the order of
a specified person, or to him or his
EXTENSION EXTENSION UNDER order. (Sec. 8)
CLAUSE SEC. 120(f) The payee must be named or
Stated on the face of Agreement binding the otherwise indicated therein with
the instrument holder; reasonable certainty.
a. To extend the time The instrument may be made payable
of payment or
b. Postpone the
to the order of:
holder’s right to a. A payee who is not the maker,
enforce the instrument drawer or drawee
Parties are bound Binds the person b. The drawer or maker
because they took the secondarily liable (and c. The drawee
instrument knowing therefore cannot be d. 2 or more payees jointly
that there is an discharged from
extension clause liabilities if:
e. One or some of several payees
a. He consents or f. The holder of an office for a
b. Right of recourse is time being
expressly reserved. Payable to Bearer
(Notes and Cases on The instrument is payable to bearer:
Banks, Negotiable
a. When it is expressed to be so
Instruments and other
Commercial payable; or
Completeness 1. Wanting in any material 1. Blank paper with Mechanically incomplete Mechanically complete
particular signature
Authority of person 1. Prima facie authority to 1.Signature operates as a No authority to complete and/or May negotiate if delivered to him by
in possession complete it by filling up prima facie authority to negotiate instrument or under the authority of the party
the blanks therein fill it up as such for any making, indorsing, drawing or
amount accepting, as the case may be.
When enforceable If filled up strictly in accordance with authority given Not enforceable When delivery is made by or under
and within a reasonable time authority of the party making,
indorsing, drawing or accepting, as
the case may be.