Questions:

Negotiable Instruments

1. The following are the characteristics of bill of exchange except one:

a. Contains an unconditional order.
b. Acceptance may be required
c. Contains an unconditional promise
d. Original parties are the drawer, drawee, payee or bearer.
2. It is the check where the drawer agrees to absolutely pay the bona fide holder of the check.
a. Memorandum check c. Crossed check
b. Cashiers check d. Managers check
3. The following are not characteristics of a general indorser except one:
a. He warrants to all subsequent holders.
b. He does not warrant the validity of the instrument.
c. He does not warrant the solvency of the maker or acceptor or the prior parties.
d. He warrants only to subsequent holders in due course.
4. It is a kind of indorsement where the name of an indorsee is specified in which case the
indorsement of the indorsee is necessary to further negotiate the instrument.
a. Restrictive Indorsement
b. Special Indorsement
c. Succesive Indorsement
d. Qualified Indorsement
5. The following are promissory notes except:
a. Due bill
b. Certificate of deposit
c. Bond
d. None of the above
6. I promise to pay Anna Magada or order P 20,000 ten days after the date signed by Jera Remojo
as maker. The note is undated. Which of the following is correct?
a. The note is non-negotiable
b. The payee can require payment at any time
c. The payee can require payment 10 days after issue
d. The payee cannot negotiate the note

7. A check is not presented for payment within a reasonable length of time after issue is called
a. Certified c. Memorandum
b. Stale d. Crossed
8. Who of the following is party with primary liability?
a. Maker c. Drawer
b. Indorser d. Person negotiating by mere delivery
9. The following are essential requisites of a negotiable promissory note except

a. Must be written and signed by the drawer.

b. Must contain an unconditional promise to pay a sum certain in money.
c. Must be payable upon fixed determinable future time.
d. Must be payable to order or bearer.

10. Juliet Pangilinan signed a promissory note payable to Rommel Monfiel or order for P 5,000 ten days
after date. Rommel Monfiel indorsed the note to D, D to E and E to F. F, without authority from the prior
parties, altered the amount to P 15,000 then indorsed the note to G.

a. The unauthorized alteration renders the note void.

b. G cannot require Juliet Pangilinan to pay anything.
c. G can require Juliet Pangilinan to pay only P 5,000 if G is a holder in due course.
d. G can require Juliet Pangilinan to pay P25, 000 if Juliet Pangilinan is a holder in due
course.

11. Drawer Pedro addressed a bill to Juan for P 20,000 payable to Maria or order 20 days after
acceptance. Juan made a conditional acceptance in this case:

a. The bill becomes non-negotiable.

b. It is still negotiable notwithstanding the conditional acceptance.
c. The holder cannot refuse to take a conditional acceptance.
d. Juan is considered a constructive acceptor.

12. The following are negotiable except:

a. Pay to bearer AA P 10,000 upon demand, signed by BB and addressed to CC.

b. Pay to AA or bearer P 10,000 upon demand, signed by BB and addressed to CC.
c. I oblige myself to pay XX or order P 3,000 ten days after day signed by YY as maker.
d. Good to RR or order P 5,000 December 1, 2014 signed by SS as maker.

13. Which of the following is not considered material alternation?

a. Changing the date.

b. Changing the amount.
c. Changing the relation of the parties.
d. None of them.
14. The negotiable promissory note signed by M as maker for P 10,000 is payable to Jose Cruz or bearer
on May 10, 2015. M however issued the note to the payee May 15, 2009. In this case:

a. The instrument is considered non-negotiable because the date of issue is later than
the date of payment.
b. Cruz can ask for payment at anytime.
c. Cruz can require payments only on May 15, 2015.
d. Cruz cannot negotiate the note.

15. AA is the drawer of a bill addressed to BB, payable to CC or order 10 days after acceptance for
P 8,000. CC negotiated the bill to DD, to EE and EE to FF. The bill was accepted by BB when presented by
FF. If the signature of AA is forge, which of the following is false?

a. BB is required to pay FF even if the signature of AA is a forgery.

b. BB is not required to pay FF since he has the defense of forgery.
c. Forgery is considered a real defense.
d. If BB dishonors the bill by non-payment FF may give to any indorse.
16. The following are functions of negotiable instrument; except:

a. used as substitute for money.

b. medium of credit transactions.
c. medium of exchange for commercial transactions.
d. none of them.

17. I promise to pay Bryan or his order the sum of P 10,000 30 days after the death of X. This is an
instrument payable:

a. At a determinable future time.

b. On demand.
c. Upon the fulfilment of a condition.
d. At an indefinite time, hence, non-negotiable.

18. A negotiable instrument that is not dated will be considered dated as the time of

a. Acceptance
b. First Endorsement
c. Last Endorsement
d. Issuance

19. Protest is required when this bill is dishonored:

a. domestic/local c. trade acceptance

b. foreign d. all of the above
20. Mama is the maker of a note, payable to Coco or order for P 10,000. Coco negotiated the note to
Dada, Dada to Eco, Eco to Fofo, Fofo to Gigi and Gigi to Hoho. Mama dishonored the note when
presented by Hoho for payment. Hoho gave notice of dishonor to ofoF. Which of the following is true?

a. All indorsers prior to Fofo are discharged.

b. Only Gigi is discharged.
c. Hoho is required to notify Mama.
d. Fofo in turn can give notice to Gigi.

21. Which of the following is not false?

a. A holder for value is not necessarily a holder in due course.

b. Only person whose signatures appear in the instrument can be held liable therein.
c. Forgery is both real and personal defense.
d. An accommodation party is liable only to a holder in due course.

22. Pay to Maria or order P 20,000 upon demand, signed by A as drawer and addressed to B. Maria
negotiated the bill to C, C to D, E stole the bill from D and indorsed it to F by forging the signature of D. F
in turn indorsed the bill to G & G to H. Which of the following is false?

a. All indorsers prior to the forgery are discharged

b. The drawer is liable to H.
c. F is liable to H.
d. Forgery is real defense.

23. Which of the following is no an incident in the life of negotiable instrument?

a. Issue
b. Notice of dishonour
c. Preparation
d. Negotiation

24. Who among the following is the holder of a negotiable instrument originally payable to order?

a. The original payee who has negotiated the instrument.

b. The endorsee who is in possession of the instrument.
c. The possessor of the instrument to whom the instrument was delivered without any
endorsement.
d. The endorsee who has negotiated the instrument.
25. It is the payment made by a person, whether a party to the bill or not, after it has been protested
for non-payment, for the benefit of any party liable thereon or for the benefit of the person for whose
account it was drawn. What is it?

a. Payment of acceptor.
b. Payment of honor.
c. Payment of donor.
d. Payment of debtor.