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Negotiable Instruments

Negotiable Instruments

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Published by sufistudent
Negotiable Instruments
Negotiable Instruments

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Published by: sufistudent on Jun 10, 2013
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09/04/2013

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NEGOTIABLE INSTRUMENTS LAW
Negotiable Instruments Law
N
EGOTIABLE
I
NSTRUMENTS
, I
N
G
ENERAL
Function and importance of negotiable instruments
Although they do not constitute legal tender, they are used as a substitute formoney.
Negotiable papers, particularly checks, constitute, at present, the media of exchange for most commercial transactions.
Negotiable instruments also serve as a medium of credit transactions.
Negotiable instruments shall produce the effect of payment only when theyhave been encashed or when through the fault of the creditor they have beenimpaired. [Article 1249, Civil Code]
Characteristics of negotiable instruments
Negotiability: That quality or attribute whereby a bill, note or check passes ormay pass from hand to hand, similar to money, so as to give the holder indue course the right to hold the instrument and collect the sum payable forhimself free from defenses.
 The most important feature of negotiable instruments is the accumulation of secondary contracts as they are transferred from one person to another.
Common forms of negotiable instruments
1.Bill of exchange2.Promissory note3.Check
Bill of exchange
A bill of exchange is an unconditional order in writing addressed by oneperson to another, signed by the person giving it, requiring the person to
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NEGOTIABLE INSTRUMENTS LAW
whom it is addressed to pay on demand or at a fixed or determinable futuretime a sum certain in money to order or to bearer. [Section 126, NegotiableInstruments Law]
Promissory note
A negotiable promissory note is an unconditional promise in writing made byone person to another, signed by the maker, engaging to pay
 
on demand orat a fixed or determinable future time a sum certain in money to order or tobearer. [Section 184, Negotiable Instruments Law]
Check 
A check is a bill of exchange drawn on a bank and payable on demand.[Section 185, Negotiable Instruments Law]
Kinds of bill of exchange
1.Draft2.Trade acceptance3.Check
Inland v. foreign bill of exchange
An inland bill of exchange is one which, on its face, purports to be both drawnand payable in the Philippines. Any other bill is a foreign bill.
Kinds of promissory notes
1.Certificate of deposit2.Bond3.Bank note4.Due bill5.Mortgage note6.Title-retaining note
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NEGOTIABLE INSTRUMENTS LAW
7.Judgment note
Bill of exchange v. promissory note
Unconditional order v. unconditional promise
 Three (3) parties in bill while only two (2) in note
Drawer in a bill is only secondarily liable while maker in a promissory isprimarily liable
A bill drawn payable to drawer's own order is complete without indorsementwhile a note drawn payable to maker's own order is not complete untilindorsed by him
A bill must be presented for acceptance in some cases while there is no needof presentment for note
Reasonable time from last negotiation v. reasonable time from issue
Form and Interpretation
Form of negotiable instruments
1.It must be in writing and signed by the maker or drawer.2.It must contain an unconditional promise or order to pay a sum certain inmoney.3.It must be payable on demand, or at a fixed or determinable future time.4.It must be payable to order or to bearer.5.Where the instrument is addressed to a drawee, he must be named orotherwise indicated therein with reasonable certainty. [Section 1, NegotiableInstruments Law]
Terms, when sufficient 
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AKSYON PARTY

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