BUSI

NESSLAW-NEGOTI
ABLEI
NSTRUMENTS

1
.Thef
oll
owi
ngar
eessent
ial
requi
si
tesofanegot
iabl
epr
omi
ssor
ynot
eexcept

a.mustbewrit
tenandsignedbyt hedrawer
b.mustcont
ainanuncondi t
ional
promisetopayasum cer
tai
ninmoney
c.mustbepayableuponfixeddetermi
nablefut
uret
ime.
d.mustbepayabletoor
derorbear er

2.Whi
choft
hef
oll
owi
ngi
snotanessent
ial
elementofabi
l
lofexchange?

a.mustbewrit
tenandsi
gnedbyt hedrawee
b.mustcont
ainanuncondi
tional
promisetopayasum cer
tai
ninmoney
c.mustbepayablet
oorderorbearer
d.dr
aweemustbenamedt herei
n

3.Thef
oll
owi
ngar
enegot
iabl
eexcept

a.“
PaytobearerJoseCruzP1 0,
000upondemand” ,si
gnedbyAandaddr essedt oB
b.“
PaytoJoseCr uzorbear
erP1 0,
000upondemand” ,si
gnedbyAandaddr essedt
oB
c.“
Iobl
i
gemysel ftopayPedroReyesororderP3,000tendaysaf
terdaysignedbyM asmaker
.
d.“
GoodtoLoror derP5,000July1,2009signedbyM asmaker

4.Whi
choft
hef
oll
owi
ngi
snegot
iabl
e?

a.“Ipr omisetopayJoseCr uzororderP1 0,

000ordeli
ver1cow 20daysaf terdat
eattheopt i
onofthehol
der
”
signedbyM asmaker
b.“Payt oPedroReyesorbearerP10,000ordeli
ver1cow on4-4-10attheopti
onofthedrawee”,si
gnedbyAand
addr essedt oB
c.“Payt oPedr oC.Cruzoror
derP5,000outoffundIdeposit
edwit
hyou”signedbyAandaddr essedtoB
d.Ipr omi setopayK.KHO oror derP1 0,
000 in5inst
all
ments,f
ir
stinst
all
mentAugust1,2009andeverymonth
thereafter,si
gnedbyM asmaker

5.Thef
oll
owi
ngar
efunct
ionsofnegot
iabl
einst
rument
;except
:

a.usedassubstit
uteformoney
b.medium ofcreditt
ransact
ions
c.medium ofexchangef orcommer
cial
transact
ions
d.noneofthem.

6.Whi
choft
hef
oll
owi
ngi
snoani
nci
denti
nthel
i
feofnegot
iabl
einst
rument
?

a,I
ssue c.Pr
eparat
ion
b.not
iceofdi
shonor d.Negot
iat
ion

7.Whi
choft
hef
oll
owi
ngi
snegot
iabl
e?

a.Post
al Moneyorder
b.Cert
if
icat
eofstock
c.Tr
easurywarrant
y
d.Noneofthem

8.Apr
omi
ssor
ynot
eispayabl
etobear
erwhen:

a.I
tispayabl
etoaper sonnamedt
her
einorbear
er
b.theonlyi
ndorsementisbl
ank
c.t
henameofpayeedoesnotsupporttobethenameofaper
son
d.all
oftheabove

9.Thef
oll
owi
ngar
econsi
der
ednegot
iat
ionexcept

a.i
ssue
b.i
ndorsementpl
usdel
i
ver
y
c.del
iver
y
d.noneofthem

1
0.Thi
sindor
sementconst
it
utest
hei
ndor
serasamer
eassi
gnoroft
het
it
leoft
hei
nst
rument
:

a.Speci
al c.qual
i
fi
ed
b.Bl
ank d.r
est
ri
cti
ve

1
1.Thef
oll
owi
ngar
erequi
si
tesi
nor
dert
hataper
soncanbeconsi
der
edahol
deri
nduecour
se;except

a.thattheinst
rumentiscompl eteandr
egul
aruponit
sface.
b.theinstr
umenti snotyetoverdueornonot
iceofdi
shonor
c.holderforvalueandingoodf ait
h
d.noneoft hem.

1
2.Whi
choft
hef
oll
owi
ngi
snotf
alse?
a.aholderforval
ueisnotnecessari
lyaholderi
nduecourse
b.onl
yper sonwhosesignat
ur eappearinthei
nstr
umentcanbeheldl
i
abl
ether
ein
c.for
geryisbothrealandpersonaldef
ense
d.anaccommodat i
onpart
yisliabl
eonlytoaholderi
nduecourse

1
3.Real
defensesar
ethoset
hatat
tachedtothei
nstrumenti
tsel
fandcanbesetupevenagai
nsthol
deri
nduecour
se.
Whi
chofthefol
lowi
ngi
snotconsi
deredreal
defense?

a.f
raudi
nfact
um c.absenceorf
ail
ureofconsi
der
ati
on
b.f
orger
y d.mi
nori
ty

1
4.Theexi
stenceoft
hepayeeandhi
sthencapaci
tyt
oindor
sei
sawar
rant
yof
:

a.t
hemaker c.dr
awer
b.accept
or d.al
loft
hem

1
5.Whi
choft
hef
oll
owi
ngi
snotawar
rant
yofaqual
i
fi
edi
ndor
ser
?

a.thei
nstr
umenti sgenui
ne
b.hehasagoodt i
tl
e
c.pri
orpart
ieshavecapacit
ytocontact
d.i
nstrumentisval
idandsubsi
sti
ng

1
6.Not
iceofdi
shonori
snotr
equi
redt
obegi
venbyadr
awerwhen:

a.Thedrawerandthedr
aweearethesameper
son
b.thedr
aweehascountermandedpayment
c.thedr
aweeisfi
cti
ti
ous
d.all
oft
heabove

1
7.Whi
choft
hef
oll
owi
ngi
snotconsi
der
edmat
eri
alal
ter
nat
ion

a.changi
ngthedate
b.changi
ngtheamount
c.changi
ngtherel
ati
onoft
hepar
ti
es
d.noneofthem

1
8.Anegot
iabl
einst
rumenti
sdi
schar
gedby:

a.paymentinduecoursebyoronbehalfoft
hepar
typri
mar
il
yli
abl
e
b.paymentinduecoursebythepart
yaccommodated
c.i
ntent
ionalcancel
l
ati
ont
hereofbythehol
der
d.noneofthem

1
9.Whooft
hef
oll
owi
ngi
spar
tywi
thpr
imar
yli
abi
l
it
y?

a.Maker c.dr
awer
b.I
ndorser d.per
sonnegot
iat
ingbymer
edel
i
ver
y

20.Achecki
snotpr
esent
edf
orpaymentwi
thi
nar
easonabl
elengt
hoft
imeaf
teri
ssuei
scal
l
ed

a.cert
if
ied c.memorandum
b.Stal
e d.cr
ossed

21.Signif
icat
ionbyt
hedr
aweeofhi
sassentt
ocompl
ywi
tht
heorderoft
hedraweris:
a.Indorsement caccept
ance
b.deli
very d.pr
esentmentf
oracceptance

22.Pr
esent
mentf
oraccept
ancei
srequi
redwhen

a.t
hebil
lispayabl
eaft
ersight
b.thebi
l
lrequir
esi
t
c.t
hebil
lisdrawnpayabl
eelsewher
ethant
her
esi
denceoft
hedr
awee
d.all
oft
hem

23.Pr
otesti
srequi
redwhent
hisbi
l
lisdi
shonor
ed:

a.domesti
c/l
ocal c.t
radeaccept
ance
b.for
eign d.al
loft
heabove

24.Thef
oll
owi
ngar
epr
omi
ssor
ynot
esexcept
:

a.duebil
l c.cer
ti
fi
cat
eofdeposi
t
b.bond d.noneoft
hem

25.
Whi
choft
hef
oll
owi
ngi
sfal
se?

a.t
heaccept
orispri
maril
yli
able
b.t
hedraweri
ssecondari
lyli
abl
e
c.t
hei
ssueisnotnegot
iati
on
d.whent
hedr
aweranddr
aweear
ethesameper
sont
hehol
derconsi
dert
hebi
l
lwasanot
e

26.Ipr
omiset
opayJoseReyesoror
derP1
0,000t
endaysaf
tert
hedat
esi
gnedbyM asmaker
.Thenot
eisundat
ed.
Whichoft
hefol
lowi
ngi
scorr
ect?

a.t
henotei
snonnegotiabl
e
b.t
hepayeecanrequi
repayment10daysaf
teri
ssue
c.t
hepayeecanrequi
repaymentatanyt
ime
d.t
hepayeecannotnegoti
atet
henote

27.Thenegoti
ablepromissorynotesignedbyM asmakerf orP10,
000ispayabletoJoseCr
uzorbear
eronMay1
0,
2009.M howeverissuedthenotetothepayeeMay1 5,2009.I
nthi
scase:
a.Theinst
rumentisconsi
derednon- negoti
ablebecauset
hedateofis
sueisl
atert
hanthedat
eofpayment
.
b.Cruzcanaskforpaymentatanyt i
me
c.Cruzcanrequi
repayment sonlyonMay1 5,2009
d.Cruzcannotnegoti
atethenote

28.“Payt
oMar i
aororderP20,000upondemand”,si
gnedbyAasdrawerandaddressedt
oB.Mar i
anegoti
atedthe
bi
llt
oC,Ct oD,Est
olethebil
lfr
om Dandindor
seditt
oFbyfor
gingt
hesignat
ureofD.Fintur
nindorsedt
hebill
toG
&Gt oH.Whichofthefol
lowi
ngisfal
se?

a.all
indorser
spriortothef
orger
yar
edi
schar
ged
b.thedrawerisli
abletoH
c.Fisli
abletoH
d.Forgeryisreal
defense

29.M i
sthemakerofanotepayabl
etoJ.Cr
uzororderforP5,000dueJul
y30,2009.Cr
uzborrowedP2,
000f
rom
CpayableJul
y31,2009andpl
edgedthenot
ebyindorsi
ngitt
oC.Whichoft
hefol
lowi
ngiscor
rect?

a.apromissor
ynot
ecannotbepledgedwi t
houttheconsentoft
hemaker
b.OnJuly30,2009Ccancoll
ectfrom M onl
yP2, 000
c.onJul
y30,2009Ccancol l
ectfr
om M P5, 000
d.par
ti
ali
ndorsementi
sal
l
owed

30.Ai
sthedrawerofabi
l
laddr
ess
edt oB,payablet
oCoror
der10daysaf
teraccept
anceforP8,
000.Cnegot
iat
ed
t
hebil
ltoD,t
oEandEt oF.Thebi
llwasacceptedbyBwhenpr
esent
edbyF.Ifthesi
gnatur
eofAisfor
ge,whi
chof
t
hefol
lowi
ngisfal
se?

a.BisrequiredtopayFeveni fthesignat
ureofAi safor
gery
b.Bisnotr equi
redtopayFsincehehast hedef
enseoff or
gery
c.Forgeryisconsider
edareal defense
d.I
fBdi shonorsthebil
lbynon- paymentFmaygi vetoanyindor
se

31.M i
sthemakerofanote,payabl
etoCororderf
orP10,
000.Cnegot
iat
edt
henotet
oD,Dt oE,Et
oF,FtoGand
Gt oH.M dishonor
edthenotewhenpr esent
edbyH f
orpayment
.H gavenot
iceofdi
shonort
oF.Whichoft
he
fol
l
owingist
rue.

a.al
li
ndorserspriort
oFar edi
schar
ged
b.onl
yGi sdischarged
c.Hisrequi
redt onoti
fyM
d.Fintur
ncangi venoticetoG

32.“Payt
oPedr
oReyesoror
derP20,
000t
endaysaf
tersi
ght

SI
GNED
ByAdr
awerasagentofB

To:B

Pedr
oReyesnegoti
atedthebi l
ltoC,C t
oD andD t
oE.Bdishonoredthebi
l
lbynonpayment
.Egavenot
iceof
di
shonort
oal
lpr
iorpart
iesexceptB.Whi
choft
hefol
l
owingi
snotcor
rect?

a.Thedr
awerisnotl
iabl
et oE
b.Thedr
awerisl
iabl
etoEsi ncehewasdul
ynot
if
iedoft
hedi
shonor
c.i
fDpaidE,Cbecomesl i
ablet
oD
d.thi
sbi
l
lmaybeconsideredasanote

33.M si
gnedapromissorynotepayabl
etoCoror derf
orP5,
000t
endaysaf
terdat
e.Cindor
sedthenot
etoD,Dt
oE
andEtoF.F,wi
thoutauthori
tyfr
om thepr
iorpar
ti
es,al
ter
edt
heamountt
oP1 5,
000theni
ndorsedt
henotet
oG.

a.t
heunauthori
zedalt
erat
ionrender st
henotevoi
d
b.Gcannotrequir
eM topayanyt hing
c.Gcanrequir
eM t opayonlyP5, 000ifGisaholderi
nduecourse
d.Gcanrequir
eM t opayP25, 000i fGisahol
derinduecour
se

34.DrawerA addr
essed abil
ltoB f
orP 20,
000 payabl
eto C oror
der20 daysaf
teraccept
ance.B madea
condi
ti
onal
accept
anceinthi
scase:

a.t
hebil
lbecomesnon- negot
iabl
e
b.i
tisst
il
lnegot
iabl
enotwit
hst
andingt
hecondit
ionalaccept
ance
c.t
heholdercannotref
usetotakeacondi
ti
onalacceptance
d.Bi
sconsi
der
edaconst
ruct
iveaccept
or

35.
Mi sthemakerofanot
eforP30,
000payabl
etoCorbear
er.Cnegot
iat
edt
henot
etoD,Dt
oE,Et
oFandFt
oM.
Whichiscor
rect
?

a.t
henot eisdi
scharged
b.thenotedisnotdischargedsincet
her
eisnopayment
c.M cannotre-i
ssuedt henote
d.Theindorser
sarenotdi schaged

36.Dr
awerAaddr
essedabi
l
ltoBpayabletoCorbear
erforP60,
000upondemand.Cnegot
iat
edt
henot
etoD,D
t
oE,EtoFandFtoG.Uponproperpr
esent
ment
,Bpaidthebi
l
l.Whi
choft
hefol
l
owingi
str
ue?

a.thebil
li
sdischarged
b.personssecondaril
yli
abl
ear
elikewi
sedischar
ged
c.t
hebill
isnotrequir
edtobepresent
edforacceptance
d.all
oftheabove

Suggest
edAnswer
s

1.A
2.A
3.A
4.A
5.D
6.D
7.D
8.D
9D
10.C
11.D
12.A
13.C
14.D
15.D
16.D
17.D
18.D
19.A
20.B
21.C
22.D
23.B
24.D
25.C
26.B
27.B
28.B
29.C
30.B
31.C
32.B
33.C
34.B
35.A