NEGO FINALS REVIEWER.docx

NEGO FINALS REVIEWER.docx

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NEGOFINALSREVIEWER

NEGOTIABLEINSTRUMENT

•Writtencontractforthepaymentofmoney,byitsformintendedassubstituteformoneyandintendedtopassfromhandtohandtogivetheholderinduecoursetherighttoholdthesameandcollectthesumdue

PROMISSORYNOTE

•unconditionalpromiseinwritingmadebyonepersontoanothersignedbythemaker

•engagingtopayondemand,oratafixedordeterminablefuturetimeasumcertaininmoneytoorderortobearer

•whereanoteisdrawntothemaker’sownorder,itisnotcompleteuntilindorsedbyhim

Parties:

1.Maker—onewhomakesapromiseandsignstheinstrument

2.Payee—partytowhomthepromiseismadeortheinstrumentispayable

BILLOFEXCHANGE

•unconditionalorderinwritingaddressedbyonepersontoanothersignedbythepersongivingit

•requiringthepersontowhomit’saddressedtopayondemandoratafixedordeterminablefuturetimeasumcertaininmoneytoorderortobearer

Parties:

1.Drawer—onewhogivestheordertopaymoneytoa3rdparty

2.Drawee—persontowhomthebillisaddressedandwhoisorderedtopay

3.Payee—partyinwhosefavorthebillisdrawnorispayable

TYPESOFBILLOFEXCHANGE:

1.Draft–acommontermforallbillsofexchangeandtheyareusedsynonymously.

N.B.Inbankdrafts,DRAWERandDRAWEEareliabletopurchaserofdraftfornotcomplyingwithhisinstructions.

2.TradeAcceptance–abillofexchangepayabletoorderandatacertainmaturity,drawnbyaselleragainstthepurchaserofgoodsasdrawee,forafixedsumofmoney,showingonitsfacetheacceptanceofthepurchaserofthegoodsandthatithasarisenoutofapurchasebygoodsbytheacceptor.

3.Banker’sAcceptance–adraftorabillofexchangeofwhichtheacceptorisabankorbankerengagedgenerallyinthebusinessofgrantingbanker’sacceptancecredit.Itissimilartoatradeacceptance,thefundamentaldifferencebeingthatthebanker’sacceptanceisdrawnagainstabankinsteadofthebuyer.

4.TrustReceipt–thewrittenorprinteddocumentsignedbytheentrusteeinfavoroftheentrustercontainingtermsandconditionssubstantiallycomplyingwiththeprovisionsofPD115（TrustReceiptLaw,whichtookeffectonJanuary21,1973）.Nofurtherformalityofexecutionorauthenticationshallbenecessarytothevalidityofthetrustreceipt.

Note:

ItistheENTRUSTEENOTtheENTRUSTERistherealownerofthetrustreceipt.

TheliabilityoftheentrusteetotheentrusterisEXCONTRACTUnotexdelicto.

5.TreasuryWarrants–a“treasurywarrant”bearingonitsfacethewords“payablefromtheappropriationforfoodadministration”isactuallyanorderforpaymentoutofaparticularfundandisNOTUNCONDITIONAL,anddoesnotfulfilltheoneoftheessentialrequirementsofanegotiableinstrument.（Abubakarv.AuditorGeneral）

6.MoneyOrder–aspeciesofdraftdrawnbythepost-officeuponanotherforanamountofmoneydepositedatthefirstpostofficebythepersonpurchasingthemoneyorderandpayableatthesecondofficetoapayeenamedintheorder.

Note:

MoneyorderisNOTnegotiable.

7.CleanandDocumentaryBillsofExchange–“Cleanbillofexchange”isonetowhicharenotattachedtodocumentsoftitletobedeliveredtothepersonagainstwhomthebillisdrawnwhenheeitheracceptsorpaysthebill.

“DocumentaryBillofExchange”isonetowhichareattacheddocumentsoftitletobedeliveredandsurrenderedtothedraweewhenheacceptsorpaysthebill.

8.D/AandD/PBillsofExchange-

“DocumentsAgainstPaymentBill”–“D/PBill”isasightortimebilltowhichareattacheddocumentstobedeliveredandsurrenderedtothedraweewhenhehaspaidthecorrespondingbill.

“DocumentsAgainstAcceptanceBill”–“D/ABill”isatimebilltowhichareattacheddocumentstobedeliveredandsurrenderedtothedraweewhenheacceptsthebill.

9.“Sightbills”arebillswhicharepayableuponpresentationoratsightorondemand.

10.“Timeorusancebills”–arebillswhicharepayableatafixedfuturetimeoratadeterminablefuturetime.

ØInlandBillofExchange–isabillwhichisoronitsfacepurportstobeBOTHdrawnandpayablewithinthePhilippineIslands.

ØForeignBillofExchange-isabillwhichis,oronitsfacepurportstobe,drawnorpayableoutsidethePhilippineIslands.

a.tobedrawninthePhilippinesbutpayableoutsidethereof;or

b.tobepayableinthePhilippinesbutdrawnoutsidethereof.

Importanceofthedistinction:

Thedistinctionisimportantin:

1.Thatforeignbillsarerequiredtobeprotested.Failuretoprotestforeignbillswilldischargepersonssecondarilyliablethereon.

2.Thedistinctionisalsoimportantforthedeterminationofthelawapplicable.

Whenbillmaybetreatedaspromissorynote.

1.Wherethedrawerandthedraweearethepersonsuchas,inadraftdrawnbyanagentonhisprincipalbyauthorityoftheprincipal.

2.Wherethedraweeisafictitiousperson.

3.Wherethedraweehasnocapacitytocontract.

Refereeincaseofneed–isthepersonwhosenamewasinsertedbythedrawerofthebillandanyindorsertowhomtheholdermayresortincaseofneed–thatisincasethebillisdishonoredbynon-acceptanceorbynon-payment.

Note:

Itistheoptionoftheholdertoresorttotherefereeincaseofneedornotashemayseefit.

BEARER

Personinpossessionofabill/notepayabletobearer

HOLDER

Payeeorindorseeofabillornotewhoisinpossessionofit,orthebearerthereof.

THELIFEOFANEGOTIABLEINSTRUMENT:

（INPAD-PD-N-PD）

1.issue

2.negotiation

3.presentmentforacceptanceincertainbills

4.acceptance

5.dishonorbyonacceptance

6.presentmentforpayment

7.dishonorbynonpayment

8.noticeofdishonor

9.protestincertaincases

10.discharge

NEGOTIABILITY

REQUISITES（SUDOC）

1.inwritingandsignedbymakerordrawer

∙nopersonliableontheinstrumentwhosesignaturedoesnotappearthereon

Exceptions:

*Apersonsigninginatradeorassumedname

*Principalisliableifadulyauthorizedagentsignsinhisownbehalf（Agentmustbedulyauthorized;Headdswordsindicatingthathesignsasanagent;Hemustdisclosedhisprincipal）

（Signaturebyprocuration-operatesasnoticethattheagenthaslimitedauthoritytosignandprincipalisboundifagentactedbeyondthelimitsofhisauthority）

*Incaseofforgery,theforgerisliableevenifhissignaturedoesnotappearontheinstrument

*Wheretheacceptormakeshisacceptanceofabillonaseparatepaper

*Whereapersonmakesawrittenpromisetoacceptabillbeforeitisdrawn

∙onewhosignsinatradeorassumednameliabletothesameextentasifhehadsignedinhisownname

∙signatureofanypartymaybemadebyadulyauthorizedagent,noparticularformofappt.necessary

2.unconditionalpromiseorordertopay

∙unqualifiedorderorpromisetopayisunconditionalthoughcoupledwith

a.anindicationofaparticularfundoutofwhichreimbursementtobemade,oraparticularaccounttobedebitedwithamount,or

b.astatementofthetransactionwhichgivesrisetotheinstrument

∙anorderorpromisetopayoutofaparticularfundisnotunconditional

asumcertaininmoney

∙evenifstipulatedtobepaid---

a.withinterest,or

b.bystatedinstallments,or

c.bystatedinstallmentswithaprovisionthatupondefaultinpaymentofanyinstallment/interest,thewholeshallbecomedue,or

d.withexchange,whetheratafixedrateoratthecurrentrate,or

e.withcostsofcollectionoranattorney’sfee,incasepaymentnotmadeatmaturity

3.payableondemand,

∙whenexpressedtobepayableondemand,oratsight,oronpresentation;

∙whennotimeforpaymentexpressed,or

∙whereaninstrumentisissued,acceptedorindorsedwhenoverdue,itis,asregardsthepersonsoissuing,accepting,orindorsingit,payableondemand

oratafixedordeterminablefuturetime

∙whenit’sexpressedtobepayableatafixedperiodafterdateorsight,or

∙onorbeforeafixedordeterminablefuturetimefixedtherein,or

∙onoratafixedperiodaftertheoccurrenceofaspecifiedeventwhichiscertaintohappen,thoughthetimeofhappeningbeuncertain

∙aninstrumentpayableuponacontingencynotnegotiable,andhappeningofeventdoesn’tcureit

4.payabletoorder

∙whereitisdrawnpayabletotheorderofaspecifiedpersonortohimorhisorder.Maybedrawnpayabletoorderof---

a.apayeenotthemaker/drawer/drawee,or

b.drawerormaker,or

c.drawee,or

d.twoormorepayeesjointly,or

e.holderofanofficefortimebeing

∙whentheinstrumentispayabletoorderthepayeemustbenamedorotherwiseindicatedthereinwithreasonablecertainty

orbearer,

∙whenexpressedtobesopayable

∙whenpayabletopersonnamedthereinorbearer

∙whenpayabletoorderorfictitious/non-existentperson,andsuchfactknowntothepersonmakingitsopayable,or

∙whennameofpayeedoesn’tpurporttobethenameofanyperson,or

∙whentheonly/lastindorsementisinblank

5.whereaddressedtodrawee:

suchdraweenamed/indicatedthereinwithreasonablecertainty

∙billmaybeaddressedtotwoormoredraweesjointly,whetherpartnersornot,butnottotwoormoredraweesinthealternativeorinsuccession

∙billmaybetreatedasaPN,atoptionofholder,where

a.draweranddraweearesameperson

b.draweeisfictitious/incapacitated

CONTINUATIONOFNEGOTIABLECHARACTER

Until:

1.restrictivelyindorsed

2.dischargedbypaymentorotherwise

EFFECTOFADDITIONALPROVISIONS

（Sec.5）Gen.Rule:

order/promisetodoanyactinadditiontothepaymentofmoneyrendersinstrumentnon-negotiable.

Exception:

negotiabilitynotaffectedbyprovisionsw/c

1.authorizesa