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Asia Pacific College of Advanced Studies Final Examination Law 3 Law On Negotiable Instruments
Asia Pacific College of Advanced Studies Final Examination Law 3 Law On Negotiable Instruments
Asia Pacific College of Advanced Studies Final Examination Law 3 Law On Negotiable Instruments
FINAL EXAMINATION
LAW 3
LAW ON NEGOTIABLE INSTRUMENTS
Items 1-32. State whether the following statements are negotiable or not.
Items 33-45. Identify what defense is applicable with the following infirmities or defects. Write P
if the answer is Personal Defense and R if Real Defense.
TRUE OR FALSE
____46. An order or promise to pay out of a particular fund is not negotiable..
____47. An accommodation party 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.
____48. A signature by “procuration” operates as notice that the agent has but a limited authority
to sign, and the principal is bound only in the case the agent in so doing acted within the
actual limits of his authority.
____49. An antedated or postdated instrument is valid, and it does not lose its negotiable
character just because it is antedated or postdated, provided this is not done for an illegal
or fraudulent purpose.
____50. An instrument where no time of payment is expressed is payable on demand.
MULTIPLE CHOICE
51. One of the following indorsements is a valid negotiation
a. Pay to A P6,000 (amount of the instrument is P10,000)
b. Pay to A 7,000 and B, the balance (amount of the instrument is P10,000)
c. Pay to A P8,000 out of the instrument of P10,000 of this note
d. Pay to A and B P10,000
52. A bill of exchange to which no document is attached when presentment for payment or
acceptance is made
a. Trade acceptance c. Clean Bill of exchange
b. Bank acceptance d. Documentary bill of exchange
53. A issued a negotiable PN to the order of B for P10,000 payable after 30 days after date. Later
B indorsed it to C. Then X stole the note from C, forged the signature of C and negotiated it
to D, and D to E, E to F, the holder. On maturity of the note, which of the following is not
correct and invalid?
a. F cannot collect from C because it was C’s signature which was forged.
b. F can collect from A because A cannot put up forgery as his defense
c. F can collect from either D or E, because their signature are genuine and the note is
operative against them
d. F cannot collect from B because he is a party prior to the forgery
54. Which of the following is not negotiable for the reason that it is not payable at a determinable
future time?
a. “On the death of X, I promise to pay to the order of P P10,000. (Sgd) M”
b. “On or before October 30, 2015, I promise to pay P or order P10,000.(Sgd) M.”
c. “Sixty days after sight, I promise to pay to the order of P P10,000. (Sgd) M”
d. “Ten days before the death of X, I promise to pay P or his order P10,000 (Sgd) M”
55. Payable to specified person
a. Pay to B or his agent P1,000
b. Pay to B or his assigns P1,000
c. Pay to B or his indorsees P1,000
d. None of the above
56. The following instruments are payable to bearer, EXCEPT
a. When it is payable to a person named therein or bearer
b. When the name of the payee does not purport to be name of any person
c. When it is payable to the order of a fictitious or non-existing person, and such fact
was known to the person making it so payable.
d. None of the above
57. The promise or order is conditional, hence non-negotiable.
a. I promise to pay B or order P20,000. Sgd Y
b. Pay B or order P20,000 (Addressed to Z signed by Y)
c. Pay to B or order P20,000 and reimburse yourself out of my money in your
possession. (Addressed to Z signed by Y)
d. Pay B or order P20,000 out of my money in your possession
58. Which of the following is not necessary in order to make an instrument negotiable?
a. It must be in writing and signed by the maker
b. It must contain an unconditional promise or order to pay a sum certain in money
c. It must be payable on demand or at a fixed future time
d. It must be payable only to a specified person
59. Which of the following is not negotiable?
a. I agree to pay to the order of P, P30,000 (Sgd M)
b. Good to P or order, P 30,000 (Sgd M)
c. I promise to pay P or order P30,000 on June 30 (Sgd M)
d. I promise to pay P or order P5,000 (Sgd M)
60. Holder H altered the amount of negotiable note from P10,000 to P110,000 then negotiated
the note to P.
a. If P is holder in due course, he can require the maker to pay P110,000
b. If P is not a holder in due course, he can require the maker to pay only the original
sum of P10,000
c. P cannot require the maker to pay because of forgery whether or not he is holder in
due course
d. P can collect P10,000 if P is a holder in due course
61. M makes a note for P3,000 payable to the order of P. P negotiates the note to A who with the
consent of P raise the amount to P30,000 and thereafter endorses it to B, B to C, and C to D,
who is not a holder in due course. In this case
a. B can recover P3,000 as against M
b. D can recover P3,000 from M
c. P and A are liable to D P3,000
d. B and C are not liable to D
62. An instrument which is originally negotiable ceases to be negotiable when
a. Restrictively indorsed c. The last and only indorsement is blank
b. Qualifiedly indorsed d. None of the above
63. The instrument is non-negotiable when
a. There is an indication of a particular fund out of which the reimbursement is to be
made
b. There is an indication of a particular account to be debited with the amount
c. The instrument is payable out of a particular fund
d. None of the above
64. An indorsement where the indorser adds the phrase “without recourse”
a. Blank b. Restrictive c. Qualified d. Conditional
65. On May 1, Doug signs a check that is payable to the order of Excel Credit Card Corporation
and that is dated July 1. This check is
a. negotiable.
66. Which of the following language on an order will create a negotiable instrument?
a. "Pay X"
b. "Please pay X"
c. "I wish you would pay X"
d. both A and B
68. Dick signs a check payable to the order of Jane, writes “this is nonnegotiable” in the lower
left corner, and gives it to her. This check is
a. negotiable.
69. Cindy signs a check payable “to the order of my blue-eyed friend” and gives it to Dan, who
does not have blue eyes. This check is
a. Negotiable
70. It is a form of expression sufficient which can be deducted as a direct promise to pay a sum
certain in money
a. Unconditional Promise c. Conditional Promise
b. Unconditional Order d. Conditional Order
ESSAY 20 Points
71- 80 Section I of NIL states that in order to be negotiable the instruments must conforms to the
following requirements. Enumerate those requirements. (2 points each)
1._____________________________________________________________________
2._____________________________________________________________________
3._____________________________________________________________________
4._____________________________________________________________________
5._____________________________________________________________________
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