NEGOTIABLE INSTRUMENTS

LAW
1. MAKER/DRAWER

Compliance Promissory
with Section 1 Note/ Bill of 2. ISSUANCE
Exchange

(P) Payee /
Indorser

3. NEGOTIATIONS
 I.
1. SUM CERTAIN Sec. 2, 5, & 7
2. PROMISE/ORDER TO PAY Sec. 3
3. DETERMINABLE FUTURE TIME Sec. 4, 7, 13, 17, 191(10) Sec. 11, 12
4. OMISSION Sec. 6 (a), (b), (c), Sec. 73
5. CONSIDERATION Sec. 24, 25, 26, 27, 28 & 29
6. ORDER INSTRUMENT Sec. 8
BEARER INSTRUMENT Sec. 9
7. SIGNATURE Sec. 17, 18, 19, 20, 21, & 23
II. Liability of the Maker / Drawer/ Drawee

1. MAKER’S LIABILITY Sec. 60

2. DRAWER’S LIABILITY Sec. 61

3. ACCEPTER’S DRAWEE’S LIABILITY Sec. 62

II. Defenses of Maker / Drawer/ Drawee
A. PERSONAL

1. Want/Failure of Consideration (Sec. 28)

2. Want of delivery of complete Instrument (Sec. 16)
3. Filling up of wrong Date (Sec. 13)
4. Filling up blanks not in record w/ the authority given &
within reasonable time (Sec. 14)
5. Simple fraud/Fraud in inducement (Sec. 55)
6. Mistake
II. Defenses of Maker / Drawer/ Drawee
A. PERSONAL

7. Intoxication
8. Innocent Alteration/Spoliation (Sec. 124, 2nd par.)
9. Ultra vires act of a corp.
10. Want of Authority of an agent
11. Illegality of contract if the form/consideration is
illegal (e.g. Gambling)
12. Insanity – If there is no notice of insanity
II. Defenses of Maker / Drawer/ Drawee
B. REAL

1. Incapacity of incapacitated person Art. 1327 N.C.C.

2. Illegality of Contract when declared by Law except if the
Maker or Dr is a party to the illegality in which case, it is
only a personal defense.
3. Want of Delivery of incomplete Inst. (Sec. 15)
4. Alteration (Sec. 124 1st para.)
5. Forgery (Sec. 13)
II. Defenses of Maker / Drawer/ Drawee
B. REAL

6. Fraud in Factum of Fraud in use contractor (Sec. 14 & Sec.

125)
7. Minority (Sec. 22)
8. Insanity if the insane has Court appointed guardian
9. Ultra vires of Corp. if its Charter or by Statute, it is prohibited
from using commercial papers.
10. Want of Authority of an Agent
 2. ISSUANCE
1. ISSUES DEFINED Sec. 191

2. a.) Authority to fill blanks Sec. 14

2. b.) Incomplete but delivered Instrument ---- (Personal Defense)

3. INCOMPLETE & UNDELIVERED --- (Real Defense) Sec. 15

4. COMPLETE BUT UNDELIVERED (Personal Defense) Sec. 16

5. MINORITY & ULTRA VIRES --- (Real Defense) Sec. 22

6. TERM SUFFICIENT Sec. 10

7. AMBIGUOUS INSTRUMENT CONST. Sec. 17 (d) & (e)

 (P) Payee/ Indorser
I. Rights as a Holder:
1. ISSUES DEFINED Sec. 191
2. a.) Authority to fill blanks Sec. 14
2. b.) Incomplete but delivered Instrument ----
(Personal Defense)

3. INCOMPLETE & UNDELIVERED --- (Real Defense) Sec. 15

4. COMPLETE BUT UNDELIVERED (Personal Defense) Sec. 16

5. MINORITY & ULTRA VIRES --- (Real Defense) Sec. 22
6. TERM SUFFICIENT Sec. 10
7. AMBIGUOUS INSTRUMENT CONST. Sec. 17 (d) & (e)
 (P) Payee/ Indorser
I. Rights as a Holder:
1.) Sec. 191 Holder Define
2.) Sec. 26 Presumption as a Holder
3.) Sec. 52 Holder in Due Course Defined
4.) Sec. 51 Holder’s right to sue for payment
5.) Sec. 53 Presumption of Holder in Due Course
5.) Sec. 54 Partial Presumption as HDC
5.) Sec. 59 Who are those presumed a HDC
6.) Sec. 55 When is title deemed defective
7.) Sec. 56 Notice of Defect
8.) Sec. 58 Original Defenses
 (P) Payee/ Indorser
II. Liability

1.) Sec. 63 Who is an Indorser

1.) Sec. 64 Irregular Indorser
Warranty where negotiation by Delivery /
2.) Sec. 65
by Qualified Indorsement
3.) Sec. 66 General Indorser
4.) Sec. 67 Indorser of Instrument by Delivery
5.) Sec. 68 Order of Liability
6.) Sec. 69 Agent or Broker
 III. Defences
Same as that of the Maker/Drawer
PERSONAL
1. Want/Failure of Consideration (Sec. 28)
2. Want of delivery of complete Instrument (Sec. 16)
3. Filling up of wrong Date (Sec. 13)
4. Filling up blanks not in record w/ the authority given
& within reasonable time (Sec. 14)
5. Simple fraud/Fraud in inducement (Sec. 55)
7. MistakeIntoxication
8. Innocent Alteration/Spoliation (Sec. 124, 2nd par.)
9. Ultra vires act of a corp.
10. Want of Authority of an agent
11. Illegality of contract if the form/consideration is illegal
(e.g. Gambling)
12. Insanity – If there is no notice of insanity
REAL
1. Incapacity of incapacitated person Art. 1327 N.C.C.
2. Illegality of Contract when declared by Law except if
the Maker or Dr is a party to the illegality in which
case, it is only a personal defense.
3. Want of Delivery of incomplete Inst. (Sec. 15)
4. Alteration (Sec. 124 1st para.)
5. Forgery (Sec. 13)
6. Fraud in Factum of Fraud in use contractor (Sec. 14 &
Sec. 125)
7. Minority (Sec. 22)
8. Insanity if the insane has Court appointed guardian
9. Ultra vires of Corp. if its Charter or by Statute, it is
prohibited from using commercial papers.
10. Want of Authority of an Agent
 3. NEGOTIATION
1. NEGOTIATION DEFINED Sec. 30
2. HOW IS NEGOTIATION MADE? Sec. 31-32
3. KINDS OF INDORSEMENT Sec. 31 (For Order Instrument)
a.) Special/Blank Indorsement (S.I/B.I) Sec. 34 to 35
b.) Restrictive Indorsement Sec. 36 to 37
3. c.) Qualified Indorsement Sec. 38
d.) Conditional Indorsement Sec. 39
4. INDORSEMENT OF BEARER INSTRUMENT Sec. 40
5. INDORSEMENT WHERE PAYABLE TO 2 OR MORE PERSONS Sec. 41
 3. NEGOTIATION
6. EFFECT OF INSTRUMENT DRAWN/INDORSED TO A PERSON AS CASHIER SEC. 42
7. INDORSEMENT IF NAME IS MISSPELLED SEC. 43
8. INDORSEMENT IN REPRESENTATIVE CAPACITY SEC. 44
9. PRESUMPTION AS TO TIME OF INDORSEMENT SEC. 45
10. PRESUMPTION AS TO PLACE OF INDORSEMENT SEC. 46
11. CONTINUATION OF NEGOTIABLE CHARACTER OF THE INSTRUMENT SEC. 47
12. STRIKING OUT OF INDORSEMENT SEC. 48
13. EFFECT OF TRANSFER WITHOUT INDORSEMENT SEC. 49
14. WHEN MAY PRIOR PARTY NEGOTIATE THE INSTRUMENT SEC. 50
 (A) HOLDER/INDORSER

I. Rights as a Holder
-same as that of payee (See I. 1-7)
II. Liability as an Indorser
– same as that of payee (See II. 1-6)
III. Defenses as an Indorser
– same as that of payee (See III. a.)1-12 & b.) 1-10)