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NEGO > Negotiation > Flashcards

Negotiation Flashcards

1
Q

what are the modes of transfer?

A

there are three modes of transfer mainly (1) Assignment (2)Negotiation (3) By operation of law

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2
Q

when the mode used is assignment, what instrument is involved

A

it could be non-negotiable or negotiable instruments

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3
Q

when the mode used is negotiation, what instrument is involved

A

always a negotiable instrument

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4
Q

when the mode used is by operation of law, what instrument is involved?

A

it could be non-negotiable or negotiable instruments

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5
Q

how can non-negotiable instrument be transferred?

A

only by assignment or by operation of law. it can never be negotiation

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6
Q

define assignment

A

it refers to the mode of transfer from one person to another without the intention of constituting the transferee as a holder in due course since such transfer does not comply with the NIL

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7
Q

define negotiation

A

it refers to the mode of transfer from one person to another so as to constitute the transferee the holder thereof

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8
Q

when the transfer is by assignment, what is the basis of the parties’ rights and obligation

A

OBLICON and other special laws

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9
Q

when the transfer is by negotiation, what is the basis of the parties rights?

A

NIL

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10
Q

if you are asked why is there a need to know if the instrument is an order or bearer, what would be your answer?

A

for us to know how to validly negotiate

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11
Q

what if the instrument payable to order is not indorsed, what is the consequence?

A

the transfer is just mere assignment hence, the holder can never be a holder in due course.

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12
Q

define issue or issuance

A

the first delivery of the instrument, complete in form to a person who takes it as a holder

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13
Q

what are the steps observe din the issuance?

A

(1) mechanical act of writing the instrument completely and in accordance with section 1 of the NIL
(2) the delivery of the complete instrument by the maker or drawer with the intention of giving effect to it

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14
Q

define indorsement

A

is the act of signing at the back of a negotiable instrument and delivering the same to another person.

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15
Q

who are the parties to an indorsement?

A

(1) indorser

(2) indorsee

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16
Q

who indorses the instrument?

A

the indorser, however, an indorser could be the original payee of the instrument or the previous indorsee.

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17
Q

when can a drawer or maker becomes the indorser?

A

when they made themselves the payee of the instrument

18
Q

how indorsement is made?

A

by simply affixing the signature or writing the name of the indorser on the instrument

19
Q

where should the indorsement be made?

A

(1) on the instrument itself or at the back or dorsal portion
(2) on a separate sheet of paper attached to the instrument. (allonge)

20
Q

is an indorsement part of the instrument?

A

no, that is why the indorsement need not to comply with section 1 of the NIL

21
Q

what if the instrument is for 10,000, how much should the indorser negotiate to the indorsee? is there any exceptions?

A

as a general rule, the indorser must indorse the entire instrument. WHOLE AMOUNT-10K

there is an exception, According to section 32, if the instrument has been paid partially, the indorser need not indorse the whole amount, only the remaining balance

22
Q

what is the effect if an indorser indorses the instrument not for its entire amount, assuming the instrument has not been paid partially or wholly

A

there is no valid negotiation. it is considered as an assignment

23
Q

what if there are two or more indorsees, how should indorser indorse so as to considered a valid negotiation?

A

if there are two or more indorsee, the indorser must indorse JOINTLY. otherwise, it will be considered as assignment

24
Q

what is the reason behind not allowing a transfer to two or more indorsees severally or severally?

A

because article 32 requires that the indorsement must be of the entire instrument

25
Q

what are the kinds of indorsement ?

A
  1. special indorsement
  2. blank indorsement
  3. Restrictive Indorsement
  4. qualified indorsement
  5. Conditional indorsement
26
Q

what is a special indorsement?

A

is an indorsement where the name of the indorsee is specified

27
Q

how do u further negotiate an instrument that is indorsed specially?

A

the indorsement of the named indorsee is necessary to validly negotiate.

28
Q

what is a blank indorsement?

A

is an indorsement where the indorsee is not specified

29
Q

an order instrument indorsed in blank becomes what kind of instrument

A

bearer instrument

30
Q

how do u further negotiate an instrument that was indorsed in blank

A

it is validly negotiated by mere delivery

31
Q

can an order instrument be converted into a bearer instrument?

A

yes, by indorsing an order instrument in blank. (section.9)

32
Q

“once a bearer is always a bearer” is this accurate?

A

yes, if it is a orignally a bearer instrument even if it was specially indorsed. the special indorsement of an instrument which is originally payable to bearer does not convert it into an order instrument

33
Q

examples of restrictive indorsement

A

(1) it prohibits further negotiation of the instrument
(2) It constitutes the indorsee the agent of indorser
(3) it vests the title in the indorsee in trust for or to the use of some other person

34
Q

if the instrument is restrictively indorsed, does it follow that the instrument is non-negotiable

A

No, it remains to be negotiable

35
Q

if the instrument is restrictively indorsed, can it still be further negotiated by the indorsee?

A

further negotiation is possible if the kind of restrictive indorsement is #2 and #3 but not #1

36
Q

what are the effects of a restrictive indorsement to a indorsee?

A

p.74

37
Q

under the second type of restrictive indorsement, it talks about agency. who is the agent and the principal?

A

agent-indorsee

principal-first indorser

38
Q

as an agent, what is the duty of the indorsee

A
  1. to collect the amount and remit it to the first indorser

2. to deposit the amount in the account of the first indorser

39
Q

can the indorsee indorse the instrument as payment for his obligation?

A

No, he is only an agent, besides there is no consideration involved between the first indorser as the principal and indorsee as the agent

“all the subsequent indorsee acquire only the right of the first indorsee under the restrictive indorsement. the right of the first indorsee is to collect and deposit hence, the subsequent indorsee would also have the same right

40
Q

can the indorsee -agent further negotiate the instrument

A

yes. the subsequent indorsee becomes the agent of the principal

41
Q

what if indorsee -agent used the instrument which was restrictively indorsed under the second type as a payment for obligation?

A

he will be liable personally

42
Q

who are the parties under the third type of restrictive indorsement?

A

the indorsee
the indorsee
the benefeciary

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