ASIA PACIFIC COLLEGE OF ADVANCED STUDIES

FINAL EXAMINATION
LAW 3
LAW ON NEGOTIABLE INSTRUMENTS

NAME: ___________________________________________ DATE:_______________

Items 1-32. State whether the following statements are negotiable or not.
1. I promise to pay X or order the sum of 200 on Oct 1, 2014. Sgd. M
2. I agree to pay X or order the sum of 200 on Oct 1, 2014. Sgd M
3. I oblige myself to pay X or order the sum of 200 on Oct 1, 2014. Sgd M
4. I commit to pay X or order the sum of 200 on Oct 1, 2014. Sgd M
5. I shall pay X or order the sum of 200 on Oct 1, 2014. Sgd M
6. I will pay X or order the sum of 200 on Oct 1, 2014. Sgd M
7. I acknowledge that I owe X or order the sum of 200 on Oct 1, 2014. Sgd M
8. Pay to X or order the sum of 100 and reimburse yourself from my salary. Sgd M To: Y
9. Pay to X or order the sum of 100 and debit the amount from my bonus. Sgd M To: Y
10. Pay to X or order the sum of 100 which is payment for the shoes I purchased. Sgd. M
11. Pay to X or order the sum of 100 from my allowance. Sgd M To: Y
12. I promise to pay S or order the sum of 100 on demand. Sgd. M
13. I promise to pay S or order the sum of 100 at sight. Sgd. M
14. I promise to pay S or order the sum of 100 upon presentation. Sgd. M
15. I promise to pay S or order the sum of 100. Sgd. M
16. I promise to pay S or order the sum of 100 on December 18, 2014. Sgd. M
17. Pay to S or order the sum of 100 30 days after date. Sgd. M
18. Pay to S or order the sum of 100 30 days after sight. Sgd. M
19. Pay to S or order the sum of 100 on or before Oct. 1, 2012. Sgd. M
20. Pay to S or order the sum of 100 30 days after the death of A. Sgd. M
21. Pay to S or order the sum of 100 30 days before the death of A. Sgd. M
22. Pay to S or order the sum of 100 30 days after he graduates. Sgd. M
23. I promise to pay S or order the sum of 100. Sgd. M
24. Pay to the order of myself the sum of 500. Sgd. M
25. Pay to the order of yourself the sum of 500. Sgd. M
26. Pay to the order of A, B and C the sum of 500. Sgd. M
27. Pay to the order of A, B, or C the sum of 500. Sgd. M
28. Pay to the order of the President of X Corp the sum of 1,000 on August 1, 2015. Sgd. M
29. Pay to bearer the sum of 5,000 on demand. Sgd. M
30. I promise to pay P or bearer the sum of 5,000. Sgd. M
31. Pay to the order of CASH 10,000. Sgd. M
32. I promise to pay to the order of Pablo Patricio the sum of 10,000. Sgd.M
At the back of instrument, Pablo Patricio merely signed as follows. Sgd. Pablo Patricio

FILL IN THE BLANKS

Items 33-45. Identify what defense is applicable with the following infirmities or defects. Write P
if the answer is Personal Defense and R if Real Defense.
____33. Want of delivery of incomplete instrument
____34. Forgery
____35. Fraud in inducement
____36. Absence or failure of consideration
____37. Minority
____38. Filling up of blanks not in accordance with authority given

____39. Insertion of a wrong date

____40. Fraud in factum
____41. Discharge
____42. Acquisition of signature by force or fear
____43. Negotiation of instrument by breach of faith
____44. Illegality of contract
____45. Duress amounting to forgery
TRUE OR FALSE
____46. An order or promise to pay out of a particular fund is not negotiable..
____47. An accommodation party is liable on the instrument to a holder for value,
notwithstanding such holder at the time of taking the instrument knew him to be only an
accommodation party.
____48. A signature by procuration operates as notice that the agent has but a limited authority
to sign, and the principal is bound only in the case the agent in so doing acted within the
actual limits of his authority.
____49. An antedated or postdated instrument is valid, and it does not lose its negotiable
character just because it is antedated or postdated, provided this is not done for an illegal
or fraudulent purpose.
____50. An instrument where no time of payment is expressed is payable on demand.
MULTIPLE CHOICE
51. One of the following indorsements is a valid negotiation
a. Pay to A P6,000 (amount of the instrument is P10,000)
b. Pay to A 7,000 and B, the balance (amount of the instrument is P10,000)
c. Pay to A P8,000 out of the instrument of P10,000 of this note
d. Pay to A and B P10,000
52. A bill of exchange to which no document is attached when presentment for payment or
acceptance is made
a. Trade acceptance
c. Clean Bill of exchange
b. Bank acceptance
d. Documentary bill of exchange
53. A issued a negotiable PN to the order of B for P10,000 payable after 30 days after date. Later
B indorsed it to C. Then X stole the note from C, forged the signature of C and negotiated it
to D, and D to E, E to F, the holder. On maturity of the note, which of the following is not
correct and invalid?
a. F cannot collect from C because it was Cs signature which was forged.
b. F can collect from A because A cannot put up forgery as his defense
c. F can collect from either D or E, because their signature are genuine and the note is
operative against them
d. F cannot collect from B because he is a party prior to the forgery
54. Which of the following is not negotiable for the reason that it is not payable at a determinable
future time?
a. On the death of X, I promise to pay to the order of P P10,000. (Sgd) M
b. On or before October 30, 2015, I promise to pay P or order P10,000.(Sgd) M.
c. Sixty days after sight, I promise to pay to the order of P P10,000. (Sgd) M
d. Ten days before the death of X, I promise to pay P or his order P10,000 (Sgd) M
55. Payable to specified person
a. Pay to B or his agent P1,000
b. Pay to B or his assigns P1,000
c. Pay to B or his indorsees P1,000
d. None of the above
56. The following instruments are payable to bearer, EXCEPT
a. When it is payable to a person named therein or bearer
b. When the name of the payee does not purport to be name of any person
c. When it is payable to the order of a fictitious or non-existing person, and such fact
was known to the person making it so payable.
d. None of the above

57. The promise or order is conditional, hence non-negotiable.

a. I promise to pay B or order P20,000. Sgd Y
b. Pay B or order P20,000 (Addressed to Z signed by Y)
c. Pay to B or order P20,000 and reimburse yourself out of my money in your
possession. (Addressed to Z signed by Y)
d. Pay B or order P20,000 out of my money in your possession
58. Which of the following is not necessary in order to make an instrument negotiable?
a. It must be in writing and signed by the maker
b. It must contain an unconditional promise or order to pay a sum certain in money
c. It must be payable on demand or at a fixed future time
d. It must be payable only to a specified person
59. Which of the following is not negotiable?
a. I agree to pay to the order of P, P30,000 (Sgd M)
b. Good to P or order, P 30,000 (Sgd M)
c. I promise to pay P or order P30,000 on June 30 (Sgd M)
d. I promise to pay P or order P5,000 (Sgd M)
60. Holder H altered the amount of negotiable note from P10,000 to P110,000 then negotiated
the note to P.
a. If P is holder in due course, he can require the maker to pay P110,000
b. If P is not a holder in due course, he can require the maker to pay only the original
sum of P10,000
c. P cannot require the maker to pay because of forgery whether or not he is holder in
due course
d. P can collect P10,000 if P is a holder in due course
61. M makes a note for P3,000 payable to the order of P. P negotiates the note to A who with the
consent of P raise the amount to P30,000 and thereafter endorses it to B, B to C, and C to D,
who is not a holder in due course. In this case
a. B can recover P3,000 as against M
b. D can recover P3,000 from M
c. P and A are liable to D P3,000
d. B and C are not liable to D
62. An instrument which is originally negotiable ceases to be negotiable when
a. Restrictively indorsed
c. The last and only indorsement is blank
b. Qualifiedly indorsed
d. None of the above
63. The instrument is non-negotiable when
a. There is an indication of a particular fund out of which the reimbursement is to be
made
b. There is an indication of a particular account to be debited with the amount
c. The instrument is payable out of a particular fund
d. None of the above
64. An indorsement where the indorser adds the phrase without recourse
a. Blank
b. Restrictive
c. Qualified
d. Conditional
65. On May 1, Doug signs a check that is payable to the order of Excel Credit Card Corporation
and that is dated July 1. This check is
a. negotiable.
b. nonnegotiable, because it is payable to Excel Credit Card Corporation.
c. nonnegotiable, because it is postdated.
d. nonnegotiable, because it is signed by Doug
66. Which of the following language on an order will create a negotiable instrument?
a. "Pay X"
b. "Please pay X"

c. "I wish you would pay X"

d. both A and B
67. Which of the following phrases indicates a bearer instrument?
a. "payable to bearer"
b. "pay to cash"
c. "pay to the order of cash"
d. all of the above
68. Dick signs a check payable to the order of Jane, writes this is nonnegotiable in the lower
left corner, and gives it to her. This check is
a. negotiable.
b. nonnegotiable, because it includes the notation this is nonnegotiable.
c. nonnegotiable, because it is not governed by Article 3.
d. nonnegotiable, because it was given to Jane
69. Cindy signs a check payable to the order of my blue-eyed friend and gives it to Dan, who
does not have blue eyes. This check is
a. Negotiable
b. nonnegotiable, because Dan does not have blue eyes.
c. nonnegotiable, because it does not indicate a specific payee
d.

nonnegotiable, because it was executed as a joke.

70. It is a form of expression sufficient which can be deducted as a direct promise to pay a sum
certain in money
a. Unconditional Promise
c. Conditional Promise
b. Unconditional Order
d. Conditional Order

ESSAY 20 Points

71- 80 Section I of NIL states that in order to be negotiable the instruments must conforms to the
following requirements. Enumerate those requirements. (2 points each)
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2._____________________________________________________________________

3._____________________________________________________________________

4._____________________________________________________________________

5._____________________________________________________________________

81-85 Differentiate Condition from a Period.

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86-90 Differentiate Personal Defense from a Real Defense

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I will persist until I succeed.

Og Mandino