Negotiable Instruments Law_prelim.docx

NEGOTIABLE INSTRUMENTS LAW PRELIMINARY EXAMINATION PART I. Multiple Choice. (3 points each question) 1. It is the transfer of a negotiable instrument from one person to another made in such a manner as to constitute the transferee a holder thereof. a. Negotiation b. Assignment

c. Both Assignment and Negotiation d. Sale

2. Which statement is correct under the Negotiable Instruments Law? a. A bearer instrument is not always a bearer instrument. b. The signature of the indorses with additional words is a sufficient indorsement. c. The indorsement must be an indorsement of the entire instrument. d. An indorsement purporting to transfer the instrument to two or more persons severally operates as a negotiation of the instrument. 3. This is an indorsement where the name of the payee is specified. a. Restrictive Indorsement b. Qualified Indorsement c. Special Indorsement d. Conditional Indorsement 4. This is an indorsement which prohibits entirely the further negotiation of an instrument or modified the rights of the holder or liabilities of the indorser. a. Restrictive Indorsement b. Qualified Indorsement c. Special Indorsement d. Conditional Indorsement 5. This is an indorsement which constitutes the indorser a mere assignor of the title to the instrument. a. Restrictive Indorsement b. Qualified Indorsement c. Special Indorsement d. Conditional Indorsement 6. Which of the following is a Negotiable Instrument? a. Letter of Credit b. Treasury Warrant c. Postal Money Order d. Certificate of Deposit 7. He is the person or party to whom the bill is addressed and who is ordered to pay. a. Drawer b. Payee c. Maker d. Drawee 8. The instrument is not valid for the reason that it is ante-dated and post-dated, provided this is not done for an illegal or fraudulent purpose. a. False b. It depends c. True d. Non-negotiable 9. The following are personal defenses except: a. Failure or Absence of consideration b. Illegal Consideration c. Non-delivery of complete instrument

d. Non-delivery of Incomplete Instrument 10. The following are real defenses except: a. Minority b. Forgery c. Material Alteration d. Mistake 11. Where a person signs in a trade or assumed name, such person may be held liable even his true signature does not appear in the instrument. a. False b. True c. It Depends d. None of the above 12. It gives a warning that the agent has but a limited authority, so that it is the duty of the person dealing with him to inquire into the extent of his authority. a. Procuration c. Assignment b. Negotiation d. Indorsement 13. He is the one who has signed the instrument as maker, drawer, acceptor or indorser without receiving for value therefore and for the purpose of lending his name to some other other person. a. Accomodation Party c. Regular Party b. Accomodated Party d. Agent 14. An indorsement cannot be made through an agent. a. True b. False c. It depends d. None of the above 15. “Payable upon completion of my mansion in Palo, Leyte. (Sgd.) Moana” a. Blank and conditional Indorsement b. Blank Indorsement c. Restrictive Indorsement d. Conditional Indorsement 16. Which of the following instruments are non-negotiable? a. “I promise to pay P or order P15,000.00 or an air conditioner at the option of the holder.” b. “I promise to pay P or order P15,000.00 or brand new air conditioner.” c. “Pay to bearer P1,000.00. Notice of dishonor waived.” d. “I promise to pay P or order P 1,000.00 thirty days after date.” 17. An instrument that does not specify the place of payment is presumed to be payable at: a. Bank of the maker or drawer b. Place of Residence of the maker or drawer c. Where the instrument was issued d. Place of residence of the payee 18. In case of doubt in what capacity the person making the instrument intended to sign, he is to be deemed: a. Maker b. Drawer c. Payee d. Indorser 19. The first delivery of the instrument complete in form, to a person who takes it as holder. a. Issue b. Negotiation c. Delivery d. Assignment

20. The payment of a check or other bill by the drawee bank is negotiation. a. True b. False c. It depends d. None of the above Part II. Essay. 1. State the requisites of negotiability. (5 points) 2. When is an instrument payable on demand? (5 points) 3. When is an instrument payable to bearer? (5 points) 4. Determine if the following instrument is negotiable: “For Value Received, I/we jointly and severally promise to pay to the ABC Corporation, the sum of ONE MILLION NINETY THREE THOUSAND SEVEN HUNDRED EIGHTY NINE PESOS & 71/100 only (P1,093,789.71), Philippine Currency, the said principal sum, to be payable in 24 monthly installments starting July 15, 1978 and every 15th of the month thereafter until fully paid…” (5 points) 5. Harry, maker, prepared a promissory note payable to the order of Hermione, but he did not sign the same and left it inside his drawer. Ronn, a thief, stole the instrument, forged Harry’s signature and delivered the same to Hermione. Hermione endorsed the same to Fred, Fred in turn indorsed it to Luna, Luna then to Hagrid, the present holder. a. Against whom can Hagrid enforce payment? (5 points) b. Will your answer be the same if the instrument is a bearer instrument? (5 points) 6. Minne Reyes signed a blank check, an in his haste to attend a party, left the check at the top of his executive desk in his office. Later, Tom forced open the door at Reyes’ office and stole the blank check. Tom immediately filled in the amount of P50,000.00 and a fictitious name as payee on the said check. Tom then endorsed the check in the payee’s name and passed it to Jerry. Thereafter, Jerry endorsed the check to Mickey. a. Can Mickey enforce the check against Minnie Reyes? Explain. (5points) b. If Mickey is a holder in due course will your answer to question (a) be the same? Explain. (5points) Bonus Questions: 1. The Negotiable Instruments Law was enacted last June 2, 1911, how many years now would have been law enforced? (5 points). 2. What are the functions of a negotiable instrument? (5 points).