Professional Documents
Culture Documents
CERTAINTY AS TO SUM;
WHAT CONSTITUTES
Sum certain requirement - if the
holder can determine from the
instrument itself the amount he is
entitled to receive at maturity.
Holder should be able to compute the
amount payable when it is due.
An instrument giving the maker the
right to ascertain the amount rightly
payable is NON-NEGOTIABLE.
Sum to be paid w/ interest
I promise to pay P or order P10,000, with
interest at 15% per annum.
I promise to pay P or order P10,000, with
interest at 15% per annum, from date
until paid; 12% if paid when due.
Sum to be paid by stated instalments
Stated instalments the interest of
each instalments and due date of each
instalments must be fixed in the
instruments
I promise to pay P or order P10,000, in
two instalments as follows: p5,000, on or
before August 1, 2016 and P5,000, on or
before September 1, 2016.
Sum to be paid by stated
instalments with acceleration clause
acceleration clause promise that if
any instalment or interest is not paid as
agreed, the whole shall become due.
PROMISE
IS
after
the
instrument is seen by the
drawee upon presentment for
acceptance or accepted by the
drawee
(b) On or before a fixed or
determinable
future
time
specified therein; or
o Determinable future time a
time that can be determined
with
certainty
after
the
execution of the instrument.
(c) On or at a fixed period after
the occurrence of a specified
event which is certain to happen,
though the time of happening be
uncertain.
o a bill or note payable several
days before the occurrence of
the specified event is NONNEGOTIABLE, since the date of
maturity
can
only
be
ascertained after it has become
overdue and therefore the time
for payment is uncertain.
An instrument payable upon a
contingency is not negotiable, and
the happening of the event does not
cure the defect.
o Contingency uncertain future
event or an event which may or
may not happen
SECTION 5. ADDITIONAL PROVISIONS
NOT AFFECTING NEGOTIABILITY.
GENERAL RULE: The instrument is nonnegotiable if it contains a promise or
order to do any act in addition to the
payment of money.
I promise to pay P or order P10,000 and
to deliver a horse
EXCEPTIONS:
An instrument is payable at
a fixed period after date but
is issued undated
o An instrument is payable at
a fixed period after sight but
the acceptance is undated.
The insertion of a wrong date in an
undated instrument by one having
knowledge of the true date of issue or
acceptance will avoid the instrument
as to him but not as to a subsequent
holder in due course who may enforce
the
same
notwithstanding
the
improper date.
Insertion of a wrong date constitutes a
material alteration. In the hands of a
holder, the date inserted, even if
wrong, is to be regarded as the true
date.
o
SECTION
16.
DELIVERY;
WHEN
EFFECTUAL;
WHEN
PRESUMED
(COMPLETE BUT UNDELIVERED)
RULES
WHERE
INSTRUMENT
MECHANICALLY COMPLETE
1. undelivered every contract on
negotiable instrument even if it is completely
written is incomplete and revocable until its
delivery for the purpose of giving effect
Delivery transfer of possession,
actual or constructive from one person
to another
the
signature of any party may be made by
a duly authorized agent. No particular
from of appointment is necessary for
this purpose and the authority of the
agent may be established as in other
cases of agency.
o Authority of the agent may be
shown to have been given orally or
in writing subject to the provisions
of the Statute of Frauds
SECTION 20. LIABILITY
SIGNING AS AGENT, ETC.
OF
PERSON
SECTION
21.
SIGNATURE
BY
PROCURATION; EFFECT OF. A signature
by procuration operates as notice
that the agent has but a limited
authority to sign, and the principal is
bound only in case the agent in so
signing acted w/in the actual limits of
his authority.
o Procuration act by w/c a
principal gives power to another to
act in his place as he could himself
The agent has limited authority so it is
the duty of the person dealing w/ him to
inquire into the extent of his authority
The principal is not bound if the agent has
exceeded the actual limits of his authority
SECTION 22. EFFECT OF INDORSEMENT
BY INFANT OR CORPORATION. The
indorsement or assignment of the
instrument by a corporation or by an
infant passes the property therein,
notwithstanding that from want of
capacity, the corporation or infant may
incur no liability thereon.
while a minor is not bound by his
indorsement by lack of capacity, he is,
however, not incapacitated to transfer
certain rights
a minor may be held bound by his
signature in an instrument where he is
guilty of actual fraud
applies to cases where the corporation
has committed ultra vires acts or acts
beyond its powers
a corporation is not liable on notes in a
suit thereon by an indorsee, where the
corporation is w/o capacity to make the
contract in fulfilment of which they were
executed
SECTION
EFFECT
23.
FORGED
SIGNATURE;
forgery
counterfeit-making
or
fraudulent alteration of any writing, etc.
w/ intent to defraud
APPLICATION OF SECTION 23
1. where the signature on the instrument
is affixed by one who does not claim to
act as an agent and who has no
authority to bind the person whose
signature he forged
2. where the signature is affixed by one
who purports to be an agent but has
no authority to bind the alleged
principal
Effect of forged signature in both cases,
the signature is wholly inoperative and so no
right can be acquired through the forged
signature. It is therefore a real defense even
against a holder in due course
Proof of forgery must be proven w/ clear
and convincing evidence
Cases of forgery in general
promissory notes
o forgery of an indorsement on the note
o forgery of the makers signature
bills of exchange
o forgery of an indorsement on the bill
o forgery of the drawers signature,
either
w/ acceptance by the drawee
w/o such acceptance but the bill is
paid by the drawee
right may still exist and be enforced by
virtue of such instrument as to those
whose signatures are found to be genuine
Exception to the general rule
GR: no right or title can be acquired to a
negotiable instrument through or under a
forged or unauthorized signature
EXCEPTIONS
1. If the party against whom it is sought
to enforce such right is precluded from
setting up the forgery or want of
authority.
2. Where the forged signature is not
necessary to the holders title in w/c
case the forgery may be disregarded
Persons precluded from setting up the
defense of forgery
An
instrument
is
negotiated when it is transferred from
one person to another in such manner
as to constitute the transferee the
holder thereof. If payable to bearer, it is
negotiated by delivery; if payable to
order,
it
is
negotiated
by
the
indorsement of the holder completed by
delivery.
Negotiation transfer of a negotiable
instrument from one person to another made
in such a manner as to constitutes the
transferee the holder thereof
There is no negotiation if the transfer
does not make the transferee the
holder of the instrument
Methods of transfer of a negotiable
instrument
1. Issue 1st delivery of the instrument
in complete form to a person who
takes it as a holder
2. Negotiation ordinarily involves
indorsement
3. Assignment transfer of the title to
an instrument, w/ the assignee taking
only such title or rights as his assignor
has, subject to all defences available
against his assignor
Methods of negotiation
1. Instruments payable to order