Professional Documents
Culture Documents
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b. Order instrument
c. Check
d. Promissory note
12. It is the one who has signed the instrument as maker, drawer,
acceptor, or indorser, without receiving value therefore, and for the
purpose of lending his name to some other person.
a. Holder in due course
b. Accommodation Party
c. Blank Indorsement
d. Qualified Indorsement
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17. Under the Negotiable Instruments Law, a signature by procuration operates as a
notice that the agent has but a limited authority to sign. Thus, a person who takes
a bill that is drawn, accepted, or indorsed by procuration is duty-bound to inquire
into the extent of the agent's authority by:
a. Examining the agents special power of attorney
b. Examining the bill to determine the extent of such authority.
c. Asking the agent about the extent of such authority.
d. Asking the principal about the extent of such authority.
18. A holder in due course holds the instrument free from any defect of title of prior
parties and free from defenses available to prior parties among themselves. An
example of such a defense is
a. Faud in inducement.
b. Duress amounting to forgery.
c. Fraud in esse contractus.
d. Alteration.
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25. Which of the following party is primarily liable under the Instrument?
a. Drawer
b. Indorser
c. Maker
d. Accommodation Party
27. The following are the conditions to constitute a holder in due course,
except:
a. He took the instrument in good faith and for value.
b. He has knowledge of infirmity in the instrument.
c. He took the instrument complete and regular in its face.
d. He became the holder of the instrument before it was overdue.
30. Analyze the following statements and determine which of the choices
below best describes the statements:
A) Notice of defect or infirmity to an agent is deemed a notice to the
principal.
B) Notice to a partner is a notice to the partnership.
C) To constitute a notice of defect, holder must have actual knowledge.
a. Only A and B are incorrect.
b. Only A and C are correct.
c. All are correct.
d. All are incorrect.
31. Jeff issues a promissory note payable to the order of Ancheta. Ancheta
indorses in blank to Ryan. Paul stole the promissory note from Ryan and
delivered the note to Mansano, a holder in due course. Mansano
delivered to Joseph, who was informed by Ryan that said note was
stolen.
a. Joseph can collect from Jeff.
b. Joseph cannot collect from Jeff.
c. Joseph should ran after Paul for payment.
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d. Both B and C are collect.
32. Dan, a holder in due course, came to Nick, the maker, for collection of
payment. In order for Nick to escape liability, which defense can he
interposed against Dan.
a. Failure of consideration
b. Want of delivery but complete instrument
c. Fraud in essecontractus
d. Spoliation
33. Joey upon hearing that his best friend is in need of money issued a
check payable to his best friend Romel. Romel, for consideration,
indorsed it to Dondy, an ordinary holder. The following are all correct,
except:
a. Joey cannot be liable to Dondy.
b. Romel was a holder for value.
c. Romel should be liable to Dondy.
d. If Dondy is a holder in due course, Joey can be held liable to Dondy.
35. Amer made a promissory note indicating that Nassief is the maker and
is payable to order of Amer. Amer forges Nassiefs signature. Amer
indorses the note to Norsad and Norsad to Ahmed, the present holder.
a. Whether Ahmed is a holder in due course or not, he cannot collect to
Nassief.
b. Whether Ahmed is a holder in due course or not, he can collect to
Nassief.
c. Whether Ahmed is a holder in due course or not, he can collect to
Amer.
d. Ahmed can collect to Nassief, provided he is a holder in due course.
38.Gloria makes a promissory note for Three Million to the order of Benigno.
To secure benignos debt to Mar of Two million, he pledges the note to
Mar as a security.
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A) Mar may recover Three Million, holding the surplus One million for
Benigno, if the note matured.
B) If Gloria has defense of failure of consideration against Benigno, Mar
can collect Two Million if he is a holder in due course.
39. Analyze the following statements and determine which of the choices
below best describes the statements:
A) A payee may be a holder in due course.
B) A drawee may be a holder in due course.
40.Mahal signed a promissory note for P500, 000 as maker, and payable to
bearer, delivered to Belo in payment for Mahals scheduled medical
operation that will make her tall. Later, Mahal was informed that it is
impossible to make her tall. However, Belo has already delivered the note
to Haden upon the terms of payment of P 300, 000 and the balance in a
month. Haden received notice of the defect. Which is true?
a. Haden can collect P 500, 000 because he is a holder in due course
entitle to the full amount of the instrument.
b. Haden must pay the balance before he can collect for the full amount.
c. Haden is a holder in due course to the extent of P300, 000, the
amount paid by him.
d. Haden cannot collect because of the failure or absence of
consideration.
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44.If a bank pays a forged check
a. The drawee bank is liable
b. The drawee bank bears the loss
c. The drawee bank is considered to have paid out of its funds
d. B and C
e. All of the above
45. In the case of PNB vs. CA, for bearer instrument the signature of payee
or holder is
a. Unnecessary to pass title to the instrument
b. Essential to transfer title to the instrument
c. Necessary to indorse the instrument
d. Unnecessary to indorse the instrument
e. None of the above
47. In the case of PNB vs. CA, for order instruments the signature of its
rightful owner is
a. Unnecessary to pass the title to the instrument
b. Essential to transfer title to the instrument
c. Necessary to indorse the instrument
d. Unnecessary to indorse the instrument
e. None of the above
50. Which of the following instruments is not negotiable for the reason
that the instrument is not payable at a determinable future time?
a. 30 days after demand, drawer A directs B to pay C or order P10,000.
b. 20 days after the death of Z, I promise to pay to the order of B,
P10,000. Sgd. Q
c. 10 days after A passes the Bar exams, I promise to pay to the order of
B P10,000. Sgd. C
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