SEC. 1-9 of the NIL Flashcards
What is a negotiable instrument?
A negotiable instrument is a written instrument signed by the maker or drawer containing an unconditional promise or order to pay a sum certain in money to order or bearer on demand, or at fixed or determinable future time.
What are the requisites of negotiability?
An instrument must be in writing and signed by the maker or drawer; contain an unconditional promise or order to pay a sum certain in money; be payable on demand, or at a fixed or determinable future time; be payable to order or bearer; and, if addressed to a drawee, the drawee must be named or indicated with reasonable certainty.
What are the functions of a negotiable instrument?
It operates as a substitute for money; creates and transfers credit; facilitates the sale of goods; increases the purchasing medium in circulation; and serves as evidence of contracts.
Is a negotiable instrument considered legal tender?
No, only notes and coins issued by the BSP are considered legal tender under the NCBA.
What happens to checks under the NCBA?
Checks do not have legal tender power; however, checks cleared and credited to the creditor’s account are equivalent to delivery of cash.
What is a Bill of Exchange?
A Bill of Exchange (BOE) is an unconditional order in writing, addressed to one person by another, requiring payment of a sum certain in money on demand, or at a fixed or determinable future time.
What is a Promissory Note?
A Promissory Note (PN) is an unconditional promise in writing made by one person to another, engaging to pay a sum certain in money on demand, or at a fixed or determinable future time.
What distinguishes negotiable instruments from non-negotiable instruments?
Only negotiable instruments are governed by the NIL; they can be transferred by negotiation, while non-negotiable instruments can only be transferred by assignment.
What is required for an instrument to be in writing?
It may be printed, in ink or pencil, and can be written on any material as a substitute for paper, such as leather, cloth, or parchment.
What is the significance of the signature on a negotiable instrument?
The signature must be adopted by the signer for authentication; even a single letter can suffice if it is intended to authenticate the instrument.
What constitutes an unconditional promise or order in a negotiable instrument?
An unconditional promise in a PN is a commitment to pay a sum certain in money, while an order in a BOE is a command to pay a sum certain in money.
What makes a promise or order conditional?
A promise or order is conditional if it specifies payment from a particular fund or account, or if it is payable upon a contingency.
Is a PN wherein the maker promises to pay “as soon as his means permit him to do so” negotiable?
No, the phrase “as soon as his means permits him to do so” renders the instrument conditional. although under the CC, it may be considered as an obligation with a period.
Can Mr. BA be considered a HDIDC?
No. He cannot be a holder because the warrant is not negotiable. The promise to pay is conditional because the sum payable is out of a particular fund, that is, the appropiration for food administration.
The bookstore appealed contending that postal money Orders are NI. How would u resolve the controversy?
The contention of the bookstore is untenable. Postal Money Orders are not NI. PMOs are under the restrictions and limitations of the Postal laws. Hence, the do not contain an unconditional promise or order required by the NIL.
