General Considerations Flashcards
What are the Distinctive Features of Negotiable Instruments?
1) Negotiability
2) Accumulation of Secondary Contracts
What does it mean when you say that an instrument is negotiable?
It can be transferred from one person to another, constituting the transferee as a holder
What is a CHECK? (Sec. 185)
A check is a bill of exchange DRAWN ON A BANK and PAYABLE ON DEMAND.
Except as herein otherwise provided, the provisions of this Act applicable to a bill of exchange payable on demand apply to a check.
What is a BILL OF EXCHANGE? (Sec. 126)
A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer.
What is a PROMISSORY NOTE? (Sec. 184)
A negotiable promissory note within the meaning of this Act is…
An unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed determinable future time, a sum certain in money to order or to bearer…
Where a note is drawn to the maker’s own order, it is not complete until indorsed by him.
Art. 1249
The delivery promissory notes payable to order , or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, when through the fault of the creditor they have been impaired.
In the meantime, the action derived from the original obligation shall be held in abeyance.
What are the functions of Negotiable Instruments?
(a) It is substitute for money;
(b) It is a medium of exchange;
(c) It is a credit instrument which increases credit circulation;
(d) It increases purchasing power in circulation;
(e) It is proof of transactions.
