Negotiable Instruments Law Questions

I.

Forms and Interpretation.

Q: What are the elements of a negotiable

instrument?
Q: What are the factors to determine the
negotiability of the instrument?
Q: What are the two kinds of negotiable instruments
under the law?
Q: Distinguish promissory note from a bill of
exchange.

II. Completion of Delivery

Q: Is the date essential to make an instrument
negotiable?
Q: When is date important?
Q: What is the effect of insertion of wrong date?
Q: Who has the authority to fill up the blanks in an
incomplete but delivered instrument?
Q: What is meant by material particular?
Q: What are the various situations involving
negotiable instruments?
Q: When is an instrument incomplete?
Q: When may a prior party be bound by an
incomplete but delivered instrument?
Q: Lorenzo signed several blank checks instructing
Nicky, his secretary, to fill them as payment for his
obligations. Nicky filled one check with her name as
payee, placed P30,000.00 thereon, endorsed and
delivered it to Evelyn as payment for goods the latter
delivered to the former. When Lorenzo found out
about the transaction, he directed the drawee bank

to dishonor the check. When Evelyn encashed the

check, it was dishonored. Is Lorenzo liable to Evelyn?
Q: What is the rule when an instrument is incomplete
and undelivered?
Q: What about the party whose signature was placed
after delivery?
Q: Can a Holder in due course hold a maker for
instruments which are incomplete and undelivered
supposing that the note was stolen, filledup, and
was subsequently negotiated?
Q: What is the effect if an instrument is undelivered?
Q: What is delivery?
Q: When is an instrument issued?
Q: Can a creditor bank who was the payee in a check
fraudulently obtained by a third person who
subsequently encashed it sue the drawerdebtor,
third person, and drawee bank for the amount of the
check?
Q: What is the effect if the instrument is in the
possession of a holder in due course?
Q: What if the instrument is in the possession of a
party other than a holder in due course?
Q: When is delivery made conditional or for a special
purpose? Provide examples.
Q: Who are immediate parties?
Q: Who are remote parties?
Q: What are the rules when an instrument is
complete and delivered?

III. Rules on Interpretation

 Q: What are the rules of construction in case of

ambiguities in a negotiable instrument?
Q: Who are the persons liable on an instrument?
Q: Is a person signing in trade name liable?
Q: What are the legal effects of an agents signature
in a negotiable instrument?
Q: What are the requisites to exempt an agent from
liability?
Q: What is meant by procuration?
Q: What is the effect of a signature by procuration?
Q: What are the effects of an infant or corporations
indorsement?
Q: What is forgery?
Q: When is there forgery?
Q: What is the effect when there is forgery?
Q: Can a payee sue the collecting bank for the
amount of the checks when it made payment of the
same under a forged endorsement in favor of the
forger?
Q: Who are precluded from setting up the defense of
forgery?
Q: What are the rights of the parties in cases of
forged instruments?
Q: A client indorsed a check with a forged
indorsement. The collecting bank indorsed the check
with the drawee bank. What are the liabilities of the
parties?
Q: What is the remedy of the drawee bank?
Q: What is the liability of the drawee bank and the
drawer for the amount paid on checks with forged

indorsements, if the same was due to the negligence

of both the drawee bank and the drawer?
Q: Can a drawerdepositor who entrusted his check
books, credit cards, passbooks, bank statements and
cancelled checks to his secretary and who had
introduced the secretary to the bank for purposes of
reconciliation of his accounts hold the drawee bank
liable for the amounts withdrawn by the secretary by
forging his signature on the checks?
Q: Can a drawer, from whom checks were stolen but
failed to report the same to the authorities or the
drawee bank, recover the value of the checks paid by
the drawee bank on the forged checks which was
stolen from the drawer?
Q: How is forgery proven and who has the burden of
proof?
Q: Discuss the legal consequences when a bank
honors a forged check.
Q: What are the kinds of fraud relating to a
negotiable instrument?
Q: The drawers signature was forged. There is,
however, a provision in the monthly bank statement
that if the drawers signature was forged, the drawer
should report it within 10 days from receipt of the
statement to the drawee. The drawer, however failed
to do so. What will be its effect insofar as the
drawers right is concerned?
Q: If forgery was committed by an employee of the
drawer whose signature was forged, does the

relationship amount to estoppel such that the drawer

is precluded in recovering from the drawee bank?