Mervidelle F.

Castro

Negotiable Instruments Law

1. State the liability of an accommodation party on an instrument.

 The accommodation party is liable on the instrument to a holder in value, in spite

such holder at any time of the taking of the instrument knew him to be only an
accommodation part.
 The accommodation party doesn't receive any valuable consideration for the
instrument he signs but he is liable to a holder for value as if the contract was not
for accommodation.

2. Give the two presumptions that under the law arise from the issue of a negotiable
instrument.

1. Every negotiable instrument is deemed prima facie to have been issued for a

valuable consideration; and
2. Every person whose signature appears thereon to have become a party thereto for
value.

3. State the liability of a maker of a promissory note when there is:

a. absence of consideration – in this case where there is a total lack of

consideration, maker is not liable to payee but is liable to holder in due course as the
defense of want of consideration is ineffective against a holder in due course

b. failure of consideration for the note – in this case where giving of valuable
consideration was contemplated but it failed to pass, maker is not liable to payee as the
agreed consideration failed to materialize. But if only the portion failed to materialize,
then payee could only recover from maker the partial of the instrument.