ST PAUL UNIVERSITY DUMAGUETE

ST PAUL UNIVERSITY SYSTEM

College of Business and Information Technology

NEGOTIABLE INSTRUMENTS MIDTERM EXAMINATION

I. ENUMERATION (20pts)

ENUMERATE WHAT IS ASKED FOR.

1-5. What are the requisites of Negotiability (SEC. 1)?

6-7. What are the two main types of Negotiable Instruments?

8-10. What are the methods of Negotiation in a: a.) bearer instrument b.) order instrument

11-15. Give (5) five kinds of indorsements:

16-20. Give the four requisites of a holder in due course (SEC. 52).

II. STATE WHETHER IT IS A NEGOTIABLE OR NON-NEGOTIABLE INSTRUMENT. EXPLAIN WHY.

(20pts)

21-22. At the option of A or order, pay Php 50,000 or a brand new motorcycle.

To: B (SGD) X

23-24. The instrument is signed as follows

KOBE JORDAN, PRINCIPAL

(SGD) MICHAEL BRYANT.

 25-26. A issues a 600 peso note in favor of B for losing two movie tickets of the latter. Is the
instrument negotiable or not?

27-28. Pay to myself or order Php 20,000.

To: B (SGD) A

29-30. I promise to pay A or order Php 1,000.00 and all other sums which shall be due to him.

31-32. I acknowledge myself to be indebted to A or order Php 1,000.00 to be paid on demand,

for value received.

33-34. I am bound to pay the sum of Php 20,000 which I received from you.

35-36. I promise to pay A or bearer the sum of Php 10,000 in two equal installments.

37-38. I promise to pay A or order Php 20,000.00 on or before September 26, 2017 plus the
amount of attorney’s fee and all costs of collection if not paid on maturity.

39-40. Because I lost the motorcycle of A, I promise to pay him or order, the sum of Php
60,000.00 in four equal installments from today.

III. MODIFIED TRUE OR FALSE (20pts)

WRITE TRUE IF THE STATEMENT IS TRUE AND FALSE IF OTHERWISE. SUPPORT YOUR ANSWER.

41-42. An order instrument specially indorsed, is subsequently indorsed in blank, converts the
instrument into a bearer instrument.

43-44. The instrument above was subsequently specially indorsed by Bruce to Peter. Peter
erased the special indorsement because he believes he can still claim from the instrument.

45-46. On the preceding problem, despite the fact that the indorsement of Bruce was struck out,
he may still be held liable on the instrument.
 47-48. When an instrument is restrictively indorsed, it loses its negotiability.

49-50. For a valid negotiation of the whole instrument, every instrument payable to two or more
payees or indorsees jointly must be indorsed by all of them.

51-52. A note payable to X or bearer was conditionally indorsed to A and subsequently

negotiated to B. Since the note, originally a bearer instrument, was generally indorsed by A to B,
the condition should not be binding upon B.

53-54. A qualified indorser could not be held liable on instrument.

55-56. A issues a note payable to B or order. In consideration of B’s debt to C, he delivers the
note to the latter but forgot to indorse it. Even so, C still has title over the instrument.

57-58. In the preceding problem, C can still validly transfer the instrument to another person.

59-60. On the same problem above, the party who the instrument was delivered may require
the prior party’s indorsement to constitute the former a ‘holder’ of the instrument.

IV. DIFFERENTIATE (Must be detailed and worth 5 points)

61-65. An instrument with a Condition upon its face vs. A Conditional Indorsement (5pts)

66-70. Personal and Real defenses (5pts)

71-75. An indorsement to Joint payees vs. Alternative payees. (5pts)

76-80. Remote party vs. Immediate party (5pts)

V. ESSAY (10pts each)
81-90. A payable to order instrument for B was specially indorsed to A. Subsequently, A specially
indorsed the instrument to C. C in turn, indorsed in blank the instrument to D and the latter
specially indorsed to E. E, the holder of the instrument, had an argument with D so out of his
anger he erased the indorsement of D.
Does E have title over the instrument? Explain.
Who is/are parties primarily and secondarily liable? Explain.
What if E struck out all the indorsements including B’s? What are the rights and/or liabilities of
A, B, C, D, and E.

91-100. What are the effects when an instrument is incomplete and not delivered? What are the
rights and liabilities of the parties? If, however, the instrument is complete but not delivered,
what are the effects? What are the rights and liabilities of the parties?