07/16/18 10.

Is it possible for an order instrument to become an

order instrument (vice versa)
1. Requirements for BOE to be negotiable
2. Draw a BOE
3. Definition of “after sight” 08/06/18
4. Requirements for PN to be negotiable
5. Draw a PN 1. Will there be a holder which is partly a HDC and
6. When is an instrument payable to order partly a Holder for Value
7. Define confession of judgment 2. Will subsequent knowledge of defects affect the
8. Difference between cognovit actionem and relicta holder’s status
verificationem 3. Does partial payment make an instrument non-
9. Draw PN payable on installment negotiable

07/19/18 08/09/18

1. Difference of instrument payable to order and that 1. Consequences of a conditional indorsement

payable to bearer 2. Options available to the party primarily obliged to
2. Draw all instances where instrument is payable to make payment
order and bearer 3. Define Facultative Indorsement
3. Draw instruments which remain negotiable even 4. Effect when instrument is restrictively indorsed
with added clauses 5. Does restrictive indorsement prevent further
negotiation of the instrument
6. Draw an example of a qualified indorsement,
07/23/18 (no class) negotiated further by delivery

07/26/18 08/13/18 (no class)

1. A issued a PN to B for the sale of shabu. B

transferred this to C and then C indorsed it to D. 08/16/18
Who can be held liable by D?
2. Section 14 1. A negotiable instrument payable to P is indorsed
3. Section 15 to A. A subsequently endorsed it to B restrictively.
4. Section 16 Who is the holder? Who will collect payment?
5. Section 17 2. A bearer instrument is indorsed successively. M to
6. Section 23 P, P to A, A to B, B to C, C to D. Who among them
7. To whom is an accommodation party liable to will be liable to the present holder?
3. Make a negotiable promissory note payable to
07/30/18 order with all kinds of indorsements, inclusing
negotiation by delivery. Who is the holder? Who
1. Can an infant be a party in a negotiable instrument can collect payment?
2. Draw a check signed by an agent
3. Who is liable in an instrument signed by an agent
4. Section 13 08/20/18
5. Difference of the date of the instrument and due
date 1. If the party primarily liable has a personal defense
6. Significance of a wrong date can the holder for value demand upon him?
2. In a BOE, can there be 2 or more payees, and/or
2 or more drawees
08/02/18 3. Three kinds of Holder for value
4. Define Confession of Judgment
1. Section 14 5. Difference between cognovit actionem and relicta
2. Section 16 verificationem
3. Section 13 6. Kind of restrictive indorsement that allows further
4. Section 23 negotiation of the instrument
5. Section 15 7. Pending fulfillment of the condition what happens
6. Section 21 to an instrument
7. Difference between assignment and negotiation 8. To whom is a person indorsing qualifiedly liable
8. Difference of real and personal defenses 9. When is there negotiation
9. Effect of said defenses to Holders in Due Course 10. Consequences of a waiver of protest
and Holders for Value 11. Define Facultative Indorsement
12. When is an instrument payable to bearer 4. Difference between an immediate party and a
13. When is it payable to order remote party
14. To whom is an accommodation party liable 5. Are intervening, remote, and immediate parties
15. Did an accommodation party receive value liable
therefore 6. What are the warranties of a drawee and an
acceptor
7. When and what will be the consequences of
08/23/18 striking out
8. Section 16
1. Is it possible to be both a HDC and a Holder for 9. Section 23
Value 10. Section 14
2. Difference between Persons Primarily Liable
(PPL) and Persons Secondarily Liable (PSL)
3. Can PPL go after a PSL if PPL paid 09/03/18 (no class)

4. In payment for a purchase, A made a PN for B in

the amount of 100k. However B only delivered 60k
worth of goods to A. Subsequent negotiations are
as follows:
ABCDE
Only D does not know that B only paid 60k. How
much may be recovered from each of the
transferors and from A.
09/06/18
1. Is presentment necessary for every NI
2. Instrument reads: pay 100k to B or order, 30 days
after sight (sgd.) A; with W as drawee. Subsequent
negotiations are as follows:
A  B  (SI) C  (QI) D  (FI) E  (SI) F  (BI)
G  (D) H

5. Can a NI payable to order/bearer be converted H went to W, and presented the NI for acceptance.
6. Who will be affected by a waiver of right
a. What are the rights available to H
7. Instrument reads: I promise to pay 100k to B or b. If W dishonors, what should H do
order (sgd.) A. However, B did not deliver the c. Who are liable to H
goods to A. Subsequent negotiations are as d. If 1 week after dishonor H negotiates to J,
follows: rights of J
e. Who should J give notice of dishonor to
A  B  (QI) C  (SI) D  (QI) E  (BI) F  (D)
G  (D) H  (SI) I  (SI) J  (SI) K  (QI) L 3. Consequences of Qualified Acceptance
4. When should notice of dishonor for non-
J is a minor. Who is/are liable? acceptance be given
5. A, drawer, received notice of dishonor, he sent
holder to present again to drawee, is that allowed?
08/27/18 (no class) what happens if accepted in 2nd presentment

08/30/18 09/10/18

1. M issued a PN to P for 80k. Subsequent 1. Can presentment be made on a Saturday

negotiations are as follows: 2. Instrument reads: pay 100k to B or order (sgd.) A;
with W as drawee. Subsequent negotiations are
M  P  (QI) A  (BI) B  (D) C  (D) D  (SI) as follows, all by SI:
E  (QI) F  (SI) I  (FI) J  (QI) K  (RI) L
ABCDEFGHEJ
a. If M dishonors due to insolvency, who are
liable to L? a. Who are liable to E, if still in his hands
b. If M dishonors because of illegal b. Who are liable to J, if in his hands
consideration who are liable to L? c. Can there be a striking out
c. What can K do before negotiation so that no d. If dishonored by W, what will J do?
one can collect from J?
d. Illustrate who can be striked out in this 3. When presentment must be made
example 4. When notice of dishonor must be made

2. To whom is an irregular indorser liable

3. Who is an intervening party 09/13/18 (no class)
FORM AND INTERPRETATION account to be debited with the amount (SECTION
3, NIL)
2. A statement of transaction which gave rise to the
Requirements for BOE to be negotiable: (SECTION instrument (SECTION 3, NIL)
1, NIL) 3. Provision which authorizes a confession of
judgment (SECTION 5, NIL)
1. It must be in writing, signed by the drawer 4. Gives the holder an election to require something
2. It must contain an unconditional order to pay a to be done in lieu of payment of money (SECTION
sum certain in money 5, NIL)
3. It must be payable on demand or on a fixed 5. Waives any advantage of any law intended for the
determinable future time benefit of the obligor (SECTION 5, NIL)
4. It must be payable to order or bearer 6. Authorizes the sale of collateral securities, in case
5. Where addressed to a drawee, he must be named the instrument is not paid in maturity (SECTION 5,
or otherwise indicated therein with reasonable NIL)
certainty.

Requirements for PN to be negotiable: (SECTION 1, Confession of judgment

NIL) Authority given in advance by the obligor to another to
confess judgment in case of future litigation.
1. It must be in writing, signed by the maker
2. It must contain an unconditional promise to pay a Cognovit actionem - A defendant’s written confession
sum certain in money of an action brought against him. to which he has no
3. It must be payable on demand or on a fixed available defense.
determinable future time
4. It must be payable to order or bearer Relicta verificationem - the confession of judgment
after pleading and before trial. In a confession relicta
verificatione, the defendant confesses the plaintiff's
When is an instrument payable to order: (SECTION cause of action and withdraws or abandons his
8, NIL) defense or other procedures taken by him.

An instrument is payable to bearer when it is payable

to the order of a specified person or to him or his order. When date may be inserted: (SECTION 13, NIL)
It may be made payable to the order of:
Where an instrument expressed to be payable at a
1. The payee who is not the maker, drawer, or fixed period after date is issued undated, or where the
drawee; acceptance of an instrument payable at a fixed period
2. The drawer or maker; after sight is undated, any holder may insert therein the
3. The drawee; true date of issue or acceptance, and the instrument
4. Two or more payees jointly; shall be payable accordingly. The insertion of a wrong
5. One or more of several payees; and date does not avoid the instrument in the hands of a
6. Holder of an office for the time being subsequent holder in due course; but as to him, the
date so inserted is to be regarded as the true date.

When is an instrument payable to bearer:

(SECTION 9, NIL) Blanks, when may be filled: (SECTION 14, NIL)

1. Expressed to be so payable; Where the instrument is wanting in any material

2. Payable to a person therein or to bearer; particular, the person in possession thereof has a
3. Payable to the order of a fictitious person, and prima facie authority to complete it by filling up the
such fact is known to the person making them so blanks therein. And a signature on a blank paper
payable; delivered by the person making the signature in order
4. Payee does not purport to be the name of any that the paper may be converted into a negotiable
person; and instrument operates as a prima facie authority to fill it
5. The only or last indorsement is an indorsement in up as such for any amount. In order, however, that any
blank. such instrument when completed may be enforced
against any person who became a party thereto prior
to its completion, it must be filled up strictly in
Instruments which remain negotiable even with accordance with the authority given and within a
added clauses reasonable time. But if any such instrument, after
1. An indication of a particular fund out of which completion, is negotiated to a holder in due course, it
reimbursement is to be made or a particular is valid and effectual for all purposes in his hands, and
he may enforce it as if it had been filled up strictly in
accordance with the authority given and within a
reasonable time.
Incomplete instrument undelivered: (SECTION 15,
NIL)
Where an incomplete instrument has not been
delivered, it will not, if completed and negotiated
without authority, be a valid contract in the hands of
any holder, as against any person whose signature
was placed thereon before delivery.
Delivery; when effectual; when presumed:
(SECTION 16, NIL)
Every contract on a negotiable instrument is
incomplete and revocable until delivery of the
instrument for the purpose of giving effect thereto. As
between immediate parties and as regards a remote
party other than a holder in due course, the delivery, in
order to be effectual, must be made either by or under
the authority of the party making, drawing, accepting,
or indorsing, as the case may be; and, in such case,
the delivery may be shown to have been conditional, or
for a special purpose only, and not for the purpose of
transferring the property in the instrument. But where
the instrument is in the hands of a holder in due course,
a valid delivery thereof by all parties prior to him so as
to make them liable to him is conclusively presumed.
And where the instrument is no longer in the
possession of a party whose signature appears
thereon, a valid and intentional delivery by him is
presumed until the contrary is proved.
Construction where instrument is ambiguous:
(SECTION 17, NIL)
Where the language of the instrument is ambiguous or
there are omissions therein, the following rules of
construction apply:
(a) Where the sum payable is expressed in words and
also in figures and there is a discrepancy between the
two, the sum denoted by the words is the sum payable;
but if the words are ambiguous or uncertain, reference
may be had to the figures to fix the amount;
(b) Where the instrument provides for the payment of
interest, without specifying the date from which interest
is to run, the interest runs from the date of the
instrument, and if the instrument is undated, from the
issue thereof;
(c) Where the instrument is not dated, it will be
considered to be dated as of the time it was issued;
(d) Where there is a conflict between the written and
printed provisions of the instrument, the written
provisions prevail;
(e) Where the instrument is so ambiguous that there is
doubt whether it is a bill or note, the holder may treat it
as either at his election;
(f) Where a signature is so placed upon the instrument
that it is not clear in what capacity the person making
the same intended to sign, he is to be deemed an
indorser;
(g) Where an instrument containing the word "I promise
to pay" is signed by two or more persons, they are
deemed to be jointly and severally liable thereon.
Liability of a person signing as an agent: (SECTION
20, NIL)
Where the instrument contains or a person adds to his
signature words indicating that he signs for or on behalf
of a principal or in a representative capacity, he is not
liable on the instrument if he was duly authorized; but
the mere addition of words describing him as an agent,
or as filling a representative character, without
disclosing his principal, does not exempt him from
personal liability.
Effect of Signature by procuration: (SECTION 21,
NIL)
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 within the actual limits of his authority.
Effect of Indorsement by Infant or corporation:
(SECTION 22, NIL)
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.
Effect of Forged Signature: (SECTION 23, NIL)
When a signature is forged or made without the
authority of the person whose signature it purports to
be, it is wholly inoperative, and no right to retain the
instrument, or to give a discharge therefor, or to
enforce payment thereof against any party thereto, can
be acquired through or under such signature, unless
the party against whom it is sought to enforce such
right is precluded from setting up the forgery or want of
authority.
CONSIDERATION
What constitutes holder for value: (SECTION 26,
NIL)
Where value has at any time been given for the
instrument, the holder is deemed a holder for value in
respect to all parties who become such prior to that
time.
Effect of want of consideration: (SECTION 28, NIL)
Absence or failure of consideration is a matter of
defense as against any person not a holder in due
course; and partial failure of consideration is a defense
pro tanto, whether the failure is an ascertained and
liquidated amount or otherwise.
Liability of accommodation party: (SECTION 29,
NIL)
An accommodation party is one who has signed the
instrument as maker, drawer, acceptor, or indorser,
without receiving value therefor, and for the purpose of
lending his name to some other person. Such a person
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.
EXERCISE: A issued a PN to B for the sale of
shabu. B transferred this to C and then C indorsed
it to D. Who can be held liable by D?
08/09/18
7. Consequences of a conditional indorsement
8. Options available to the party primarily obliged to
make payment
9. Define Facultative Indorsement
10. Effect when instrument is restrictively indorsed
11. Does restrictive indorsement prevent further
negotiation of the instrument
12. Draw an example of a qualified indorsement,
negotiated further by delivery
08/13/18 (no class)
08/16/18
4. A negotiable instrument payable to P is indorsed
to A. A subsequently endorsed it to B restrictively.
Who is the holder? Who will collect payment?
5. A bearer instrument is indorsed successively. M to
P, P to A, A to B, B to C, C to D. Who among them
will be liable to the present holder?
6. Make a negotiable promissory note payable to
order with all kinds of indorsements, inclusing
negotiation by delivery. Who is the holder? Who
can collect payment?

NEGOTIATION
08/20/18
Difference between assignment and negotiation:

Negotiation – operates to make a transferee of a NI

the holder thereof. Done by indorsement and delivery
in cases of order NI, and by delivery in cases of bearer
NI. (SECTION 30, NIL)

Assignment – merely makes the transferee an

assignee, taking only such rights of his assignor.

Consequences of a conditional indorsement:

(SECTION 39, NIL)

11. Difference of real and personal defenses

12. Effect of said defenses to Holders in Due Course
and Holders for Value
13. Is it possible for an order instrument to become an
order instrument (vice versa)

4. Will there be a holder which is partly a HDC and

partly a Holder for Value
5. Will subsequent knowledge of defects affect the
holder’s status
6. Does partial payment make an instrument non-
negotiable