This document contains a midterm exam on negotiable instrument law with three sections:
1) A true/false section with 10 questions testing basic concepts of negotiable instruments.
2) A multiple choice section with 10 questions on negotiable instrument topics like parties to instruments, holder in due course status, and liability.
3) An essay question asking about a scenario involving a forged signature on a bill of exchange and whether refusal to pay a holder in due course is justified.
This document contains a midterm exam on negotiable instrument law with three sections:
1) A true/false section with 10 questions testing basic concepts of negotiable instruments.
2) A multiple choice section with 10 questions on negotiable instrument topics like parties to instruments, holder in due course status, and liability.
3) An essay question asking about a scenario involving a forged signature on a bill of exchange and whether refusal to pay a holder in due course is justified.
This document contains a midterm exam on negotiable instrument law with three sections:
1) A true/false section with 10 questions testing basic concepts of negotiable instruments.
2) A multiple choice section with 10 questions on negotiable instrument topics like parties to instruments, holder in due course status, and liability.
3) An essay question asking about a scenario involving a forged signature on a bill of exchange and whether refusal to pay a holder in due course is justified.
1. A payor for honor must not be a party to the instrument.
2. A promise to pay 5 days after the death of a person is payable at a determinable future time. 3. An instrument payable to order becomes a bearer instrument if the last endorsement is an endorsement in blank. 4. A bearer instrument becomes an order instrument if the instrument is endorsed through a special endorsement. 5. A promissory note payable to the order of a fictitious person is a bearer instrument. 6. The Negotiable Instrument Law requires that the payee must be named or otherwise indicated therein with reasonable certainty. 7. If the negotiable instrument is endorsed by conditional endorsement, the instrument becomes non-negotiable because it already contains a condition. 8. The negotiability of the instrument is ended when it is restrictively endorsed. 9. The maker can refuse to pay the holder who is a holder in due course if an incomplete but delivered instrument is completed beyond the authority given. 10. A promissory note which promises to pay the amount on a stated installment still contains a promise to pay a sum certain in money.
TEST II. MULTIPLE CHOICE
1. First Statement. As a general rule, the person secondarily
liable on the instrument is released from liability if there is delay in the presentation of payment of the instrument. Second statement. The defense for complete but undelivered instrument is merely a personal defense if the same is negotiated without authority.
a. Both statements are true.
b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false.
2. First Statement. Every holder is presumed to be a holder in due
course. Second statement. Presentment for payment is not necessary to charge the person primarily liable.
a. Both statements are true.
b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false. 3. First Statement. The person primarily liable is required to pay according to the original tenor of a materially altered instrument if the same is in the hands of a holder in due course. Second statement. Drawer is a party to a bill of exchange. . a. Both statements are true. b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false.
4. First statement. If an instrument is issued when overdue the
holder cannot be a holder in due course. Second statement. The maker is a party to a bill of exchange.
a. Both statements are true.
b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false.
5. First Statement. The sum is still certain even if it contains an
additional provision which undertakes to pay attorney’s fees and cost of collection in case of default. Second statement. A negotiable promissory note becomes non-negotiable if it contains a seal.
a. Both statements are true.
b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false.
6. First Statement. If an incomplete and undelivered promissory
note is completed and negotiated without authority, the maker can refuse to pay even if the holder is a holder in due course. Second statement. An accommodated party can still be held liable on the instrument even if no notice of dishonor is given to him.
a. Both statements are true.
b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false.
7. First Statement. The drawer’s liability on the instrument is
primary. Second statement. The acceptor admits the existence of the drawer, the genuineness of his signature and his capacity and authority to draw the instrument.
a. Both statements are true.
b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false.
8. First Statement. The drawee has no liability on the instrument
unless and until he accepts the same. Second statement. A person who negotiates the instrument by delivery warrant to the transferee and to subsequent parties that the instrument is valid and subsisting.
a. Both statements are true.
b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false.
9. First Statement. Protest is required in foreign bill of exchange.
Second statement. The order to pay to two or more drawee can be in the alternative.
a. Both statements are true.
b. The first statement is true but the second statement is false. c. The first statement is false but the second statement is true. d. Both statements are false.
10. First Statement. An intentional cancellation of the instrument
discharges the instrument. Second statement. An order to pay out of a particular fund is conditional order to pay.
a. Both statements are true.
b. The first statement is true while the second statement is false. c. The first statement is false while the second statement is true. d. Both statements are false.
III. DECIDE WITH REASON
1. The bill of exchange ostensibly issued by Aldwin in the amount
of Php 500,000.00 was presented to Miko for acceptance by Rico. Miko accepted the instrument for Php 400,000.00. After the instrument was accepted by Miko, Rico negotiated it to Ramon. On the due date, Ramon presented it for payment to Rico but the latter found out that the signature of Aldwin is a forgery and so he refused to pay Ramon despite that the latter is a holder in due course. Is the refusal of Rico justified? Why.