People Who Are Liable Flashcards
Describe the liability of a MAKER. (Sec. 60)
The maker of a negotiable instrument, by making it, engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to indorse.
Describe the liability of a DRAWER. (Sec. 61)
The drawer by drawing the instrument admits the existence of the payee and his then capacity to indorse; and engages that, on due presentment, the instrument will be accepted or paid, or both, according to its tenor, and that if it be dishonored and the necessary proceeding on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder.
Describe the liability of the ACCEPTOR. (Sec. 62)
The acceptor, by accepting the instrument, engages that he will pay it according to the tenor of his acceptance and admits:
(a) The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument; and
(b) The existence of the payee and his then capacity to indorse.
Describe the liability of an IRREGULAR INDORSER. (sec. 64)
Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser, in accordance with the following rules:
(a) if the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties;
(b) if the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer;
(c) if he signs for the accommodation of the payee, he is liable to all parties subsequent to the payee.
What does a person warrants when he negotiates through deliver? (Sec. 65)
Every person negotiating an instrument by delivery or by a qualified indorsement warrants:
(a) That the instrument is genuine and in all respect what it purports to be;
(b) That he has good title to it;
(c) That all prior parties had capacity to contract;
(d) That he has no knowledge of any fact which would impair the validity of the instrument or render it valueless.
But when the negotiation is by deliver only, the warranty extends in favor of no holder other than the immediate transferee.
The provision of subdivision (c) of this section do not apply to a person negotiation public or corporation securities other than bills and notes.
Describe the liability of a GENERAL INDORSER. (Sec. 66)
Every indorser who indorses without qualification, warrants to all subsequent holders in due course:
(a) The matter and things mentioned in subdvisions (a), (b), and (c) of the next preceding section; and
(b) That the instrument is, at the time of his indorsement, valid and subsisting;
And, in addition, he engages that, on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceeding on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it.
Describe the liability of an indorser where the instrument/paper is negotiable by deliver. (Sec. 67)
Where a person places his indorsement on an instrument negotiable by delivery, he incurs all the liability of an indorser.
Describe the liability of an AGENT OR BROKER. (Sec. 69)
Where a broker or other agents negotiates an instrument without indorsement, he incurs all the liabilities prescribed by Sec. 65 of this Act, UNLESS he discloses the name of his principal and the fact that he is acting only as agent.
What is the GENERAL RULE on Persons Liable on an Instrument? (Sec. 18)
No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided.
But one who signs in a trade assumed name will be liable to the same extent. if he had signed in his own name.
What are the EXCEPTIONS provided by Art. 18?
(a) *Where a person sign in a trade or assumed name (Sec. 18, par.2);
(b) The principal is liable if a duly authorized agent signs on his own behalf (Sec. 19);
(c) In case of forgery (Sec. 23), the forger is liable even if his signature does not appear on the instrument;
(d) Where the acceptor makes his acceptance of a bill on a separate paper (Sec. 134); and
(e) Where a person makes a written promise to accept a bill before it is drawn. (Sec. 135)
May the instrument be signed by a duly authorized agent in behalf of another? (Sec. 19)
The signature of any party may be made y a duly-authorized agent. No particular form of appointment is necessary for this purpose; and the authority of the agent may be established as in other cases of agency.
When is an AGENT liable and when he is not liable? (Sec. 20)
Where the instrument contains or a person adds to his ignature words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is NOT liable on the instrument if he was duly authorized;
but the mere addition of words describing him as an agent, or. filling a representative character without disclosing his principal, does not exempt him from personal liability.
Reason for the rule on disclosure by agent of principal. (The Phil. Bank of Commerce v. Aruego)
It is better that a careless or ignorant agent shall sometimes pay for his principal, than to subject the construction of valid written contracts to the manifold perversions, misapprehensions, and uncertainties of oral testimony.
Procuration (Fink v. Scott)
The act by which a principal gives power to another to act in his place as he could himself.
What is the effect of procuration? (Sec. 21)
A signature made by procuration operates as notice that the agent has but a limited authority to sign, and the principal is bound only in case the agent in so signing acted within the actual limits of his authority.
*the person has duty to inquire into the extent of his authority.
