TEST III- TRUE OR FALSE.

Write the word "TRUE" if the statement is true, and the word FALSE" if the
statement is false.

F 1. An instrument which contains a promise or order to pay a sum of money which is subject to a
condition is negotiable as long as the condition happens.

T 2. An instrument where no time for payment is expressed is payable on demand.

F 3. An instrument payable to a specified person or his agent is payable to order.

T 4. The negotiable character of an instrument is not affected by the fact that it is not dated.

F 5. A bill of exchange which is addressed to two or more drawees alternatively does not affect the
negotiable character of an instrument.

T 6. Where the name of the payee does not purport to be the name of any person, the instrument is
payable to bearer.

T 7. Where an instrument is payable to the order of a "fictitious person", the instrument is still payable
to bearer although such person is actually existing as long as he was not the intended recipient of the
payment.

F 8. A bearer negotiable instrument is converted into an order negotiable instrument if it is specially

indorsed.

F 9. An order instrument becomes a bearer instrument if one of several indorsements is an indorsement

in blank.

T 10. The ante-dating or post-dating of an instrument does not render it invalid provided it is not done
for an illegal purpose.

T 11. An instrument that it is incomplete but delivered, when completed without authority, shall be
considered to have been completed with authority in the hands of a holder in due course.

T 12. An instrument that is complete but is undelivered shall be considered validly delivered if it is in the
hands of a holder in due course.

T 13. If the amount due on an instrument is payable in installments, the amount and maturity of each
installment must be stated so that the negotiable character of the instrument will not be affected.

F 14. When there is a conflict between the written and printed provisions of an instrument, the printed
provisions will prevail.

T 15. When an instrument provides for the payment of interest without specifying the date from which
the interest is to run, the interest runs from the date he instrumer.t.

T 16. When an instrument is not dated, it will be dated as of the time it was issued.

T 17. When an instrument containing the words "I promise to pay" is signed by two or more persons,
they are deemed to be jointly and severally liable.
T 18. When a signature is so placed upon the instrument that it is not clear in what capacity the person
making it intended to sign, he is deemed to be an indorser.

F 19. When an indorsement is forged in a promissory note payable to bearer, the party whose
indorsement was forged and all parties prior to him may raise the defense of forgery against any holder.

T 20. A pre-existing debt constitutes value and may be the consideration of an instrument.

F 21. Want or absence of consideration is a defense against a holder in due course.

F 22. A negotiable instrument may not be transferred by assignment.

T 23. A person signing an instrument as an agent is not liable thereon provided he is duly authorized,
discloses his principal, and indicates that he is signing as an agent.

T 24. An indorsement made by a minor passes title to the instrument although he himself does not incur
any liability on the instrument.

T 25. An indorsement may be written on a separate sheet which is attached to the instrument.

T 26. As a rule, an indorsement must be of the whole amount of the instrument

F 27. An indorsement to two or more indorsees severally such as "Pay to A, 10,000.00 and to B. P5,000"
is a valid indorsement of the instrument.

T 28. An indorsement that prohibits the further negotiation of the instrument renders the instrument
non-negotiable.

T 29. If an indorsement is conditional, the party required to pay the instrument may disregard the
condition and make payment but the indorsee must hold the proceeds subject to the rights of the
person indorsing conditionally.

T 30. If an instrument is indorsed to two or more persons jointly, all of them must indorse unless one is
authorized to dorse for the others.

T 31. An instrument negotiable in origin continues to be negotiable until it is restrictively indorsed or

discharged by payment or otherwise.

F 32. When an instrument is negotiated to a prior party, the prior party can go after the intervening
parties for the amount of the instrument.

T 33. A holder may still be a holder in due course even if the instrument is not dated.

T 34. If an instrument stamped with the words "no sufficient funds" is negotiated, the holder will no
longer be considered a holder in due course.

T 35. A personal defense is available only against a holder not in due course.

T 36. Every holder is presumed to be a holder in due course.

T 37. A holder can still collect on the instrument even if he is not a holder in due course provided he
derives his title from a holder in due course and he himself is not a party to any fraud or illegality
affecting the instrument.
T 38. If a holder has received notice of any defect or infirmity of the instrument before he has paid the
full amount agreed to be paid therefor, he will be deemed a holder in due course only to the extent of
the amount paid by him.

F 39. When a negotiable instrument is delivered without any indorsement, the negotiation takes effect
at the time of its first delivery if it is subsequently indorsed.

T 40. When an instrument originally payable to bearer is specially indorsed, the person indorsing
specially is liable only to such holders make title through his indorsement.

T 41. Indorsers are liable prima facie in the order in which they indorse.

T 42. Joint payees or joint indorsees are deemed to indorse jointly and severally.

F 43. Payment in good faith before maturity which is made by the principal debtor to the holder and
without notice that his title is defective discharges the instrument.

T 44. The cancellation of a negotiable instrument which is made by the holder is presumed to have been
made intentionally

F 45. When the principal debtor becomes the holder in his own right before maturity, the instrument is
discharged by confusion or merger.

F 46. An absolute and unconditional renunciation made by the holder before, at or after maturity in
favor of the principal debtor discharges the instrument.

T 47. A bill of exchange does not operate as an assignment of funds in the hands of the drawee and the
drawee is not liable until he accepts the same.

T 48. The certification of a check by a bank is equivalent to acceptance, and when procured by the
holder, the drawer and the indorsers are discharged.

T 49. A check is always payable on demand.

T 50. The drawer of a bill of exchange need not have funds with the drawee except in the case of a
check.