LAW ON NEGOTIABLE INSTRUMENTS

1. The following are essential requisites of a negotiable promissory note except

a. must be written and signed by the drawer
b. must contain an unconditional promise to pay a sum certain in money
c. must be payable upon fixed determinable future time.
d. must be payable to order or bearer
2. Which of the following is not an essential element of a bill of exchange?
a. must be written and signed by the drawee
b. must contain an unconditional promise to pay a sum certain in money
c. must be payable to order or bearer
d. drawee must be named therein
3. The following are negotiable except
a. ay to bearer !ose "ru# 1$%$$$ upon demand&% signed by ' and addressed
to (
b. ay to !ose "ru# or bearer 1$%$$$ upon demand&% signed by ' and
addressed to (
c. ) oblige myself to pay edro *eyes or order 3%$$$ ten days after day signed
by + as ma,er.
d. -ood to . or order /%$$$ !uly 1% 2$$0 signed by + as ma,er
1. Which of the following is negotiable?
a. ) promise to pay !ose "ru# or order 1$%$$$ or deli2er 1 cow 2$ days after
date at the option of the holder& signed by + as ma,er
b. ay to edro *eyes or bearer 1$%$$$ or deli2er 1 cow on 13131$ at the
option of the drawee&% signed by ' and addressed to (
c. ay to edro ". "ru# or order /%$$$ out of fund ) deposited with you&
signed by ' and addressed to (
d. ) promise to pay 4. 456 or order 1$%$$$ in / installments% first installment
'ugust 1% 2$$0 and e2ery month thereafter% signed by + as ma,er
/. The following are functions of negotiable instrument7 except8
a. used as substitute for money
b. medium of credit transactions
c. medium of exchange for commercial transactions
d. none of them.
9. Which of the following is no an incident in the life of negotiable instrument?
a% )ssue c. reparation
b. notice of dishonor d. :egotiation
LAW ON NEGOTIABLE INSTRUMENTS
;. Which of the following is negotiable?
a. ostal +oney order
b. "ertificate of stoc,
c. Treasury warranty
d. :one of them
<. ' promissory note is payable to bearer when8
a. )t is payable to a person named therein or bearer
b. the only indorsement is blan,
c. the name of payee does not support to be the name of a person
d. all of the abo2e
0. The following are considered negotiation except
a. issue
b. indorsement plus deli2ery
c. deli2ery
d. none of them
1$. This indorsement constitutes the indorser as a mere assignor of the title of
the instrument8
a. =pecial c. qualified
b. (lan, d. restricti2e
11. The following are requisites in order that a person can be considered a holder
in due course7 except
a. that the instrument is complete and regular upon its face.
b. the instrument is not yet o2erdue or no notice of dishonor
c. holder for 2alue and in good faith
d. none of them.
12. Which of the following is not false?
a. a holder for 2alue is not necessarily a holder in due course
b. only person whose signature appear in the instrument can be held liable
therein
c. forgery is both real and personal defense
d. an accommodation party is liable only to a holder in due course
LAW ON NEGOTIABLE INSTRUMENTS
13. *eal defenses are those that attached to the instrument itself and can be set
up e2en against holder in due course. Which of the following is not considered
real defense?
a. fraud in factum c. absence or failure of
consideration
b. forgery d. minority
11. The existence of the payee and his then capacity to indorse is a warranty of8
a. the ma,er c. drawer
b. acceptor d. all of them
1/. Which of the following is not a warranty of a qualified indorser?
a. the instrument is genuine
b. he has a good title
c. prior parties ha2e capacity to contact
d. instrument is 2alid and subsisting
19. :otice of dishonor is not required to be gi2en by a drawer when8
a. The drawer and the drawee are the same person
b. the drawee has countermanded payment
c. the drawee is fictitious
d. all of the abo2e
1;. Which of the following is not considered material alternation
a. changing the date
b. changing the amount
c. changing the relation of the parties
d. none of them
1<. ' negotiable instrument is discharged by8
a. payment in due course by or on behalf of the party primarily liable
b. payment in due course by the party accommodated
c. intentional cancellation thereof by the holder
d. none of them
10. Who of the following is party with primary liability?
a. +a,er c. drawer
b. )ndorser d. person negotiating by mere deli2ery
LAW ON NEGOTIABLE INSTRUMENTS
2$. ' chec, is not presented for payment within a reasonable length of time after
issue is called
a. certified c. memorandum
b. =tale d. crossed
21. =ignification by the drawee of his assent to comply with the order of the
drawer is8
a. )ndorsement c acceptance
b. deli2ery d. presentment for acceptance
22. resentment for acceptance is required when
a. the bill is payable after sight
b. the bill requires it
c. the bill is drawn payable elsewhere than the residence of the drawee
d. all of them
23. rotest is required when this bill is dishonored8
a. domestic>local c. trade acceptance
b. foreign d. all of the abo2e
21. The following are promissory notes except8
a. due bill c. certificate of deposit
b. bond d. none of them
2/.Which of the following is false?
a. the acceptor is primarily liable
b. the drawer is secondarily liable
c. the issue is not negotiation
d. when the drawer and drawee are the same person the holder consider the bill
was a note
29. ) promise to pay !ose *eyes or order 1$%$$$ ten days after the date signed
by + as ma,er. The note is undated. Which of the following is correct?
a. the note is non negotiable
b. the payee can require payment 1$ days after issue
c. the payee can require payment at any time
d. the payee cannot negotiate the note
LAW ON NEGOTIABLE INSTRUMENTS
2;. The negotiable promissory note signed by + as ma,er for 1$%$$$ is
payable to !ose "ru# or bearer on +ay 1$% 2$$0. + howe2er issued the note to
the payee +ay 1/% 2$$0. )n this case8
a. The instrument is considered non3negotiable because the date of issue is later
than the date of payment.
b. "ru# can as, for payment at anytime
c. "ru# can require payments only on +ay 1/% 2$$0
d. "ru# cannot negotiate the note
2<. ay to +aria or order 2$%$$$ upon demand&% signed by ' as drawer and
addressed to (. +aria negotiated the bill to "% " to ?% @ stole the bill from ? and
indorsed it to A by forging the signature of ?. A in turn indorsed the bill to - B -
to 5. Which of the following is false?
a. all indorsers prior to the forgery are discharged
b. the drawer is liable to 5
c. A is liable to 5
d. Aorgery is real defense
20. + is the ma,er of a note payable to !. "ru# or order for /%$$$ due !uly 3$%
2$$0. "ru# borrowed 2%$$$ from " payable !uly 31% 2$$0 and pledged the
note by indorsing it to ". Which of the following is correct?
a. a promissory note cannot be pledged without the consent of the ma,er
b. 6n !uly 3$% 2$$0 " can collect from + only 2%$$$
c. on !uly 3$% 2$$0 " can collect from + /%$$$
d. partial indorsement is allowed
3$. ' is the drawer of a bill addressed to (% payable to " or order 1$ days after
acceptance for <%$$$. " negotiated the bill to ?% to @ and @ to A. The bill was
accepted by ( when presented by A. )f the signature of ' is forge% which of the
following is false?
a. ( is required to pay A e2en if the signature of ' is a forgery
b. ( is not required to pay A since he has the defense of forgery
c. Aorgery is considered a real defense
d. )f ( dishonors the bill by non3payment A may gi2e to any indorse
31. + is the ma,er of a note% payable to " or order for 1$%$$$. " negotiated the
note to ?% ? to @% @ to A% A to - and - to 5. + dishonored the note when
presented by 5 for payment. 5 ga2e notice of dishonor to A. Which of the
following is true.
a. all indorsers prior to A are discharged
b. only - is discharged
c. 5 is required to notify +
LAW ON NEGOTIABLE INSTRUMENTS
d. A in turn can gi2e notice to -
32. ay to edro *eyes or order 2$%$$$ ten days after sight
=)-:@?
(y ' drawer as agent of (
To8 (
edro *eyes negotiated the bill to "% " to ? and ? to @. ( dishonored the bill by
non payment. @ ga2e notice of dishonor to all prior parties except (. Which of the
following is not correct?
a. The drawer is not liable to @
b. The drawer is liable to @ since he was duly notified of the dishonor
c. if ? paid @ % " becomes liable to ?
d. this bill maybe considered as a note
33. + signed a promissory note payable to " or order for /%$$$ ten days after
date. " indorsed the note to ?% ? to @ and @ to A. A% without authority from the
prior parties% altered the amount to 1/%$$$ then indorsed the note to -.
a. the unauthori#ed alteration renders the note 2oid
b. - cannot require + to pay anything
c. - can require + to pay only /%$$$ if - is a holder in due course
d. - can require + to pay 2/%$$$ if - is a holder in due course
31. ?rawer ' addressed a bill to ( for 2$%$$$ payable to " or order 2$ days
after acceptance. ( made a conditional acceptance in this case8
a. the bill becomes non3negotiable
b. it is still negotiable notwithstanding the conditional acceptance
c. the holder cannot refuse to ta,e a conditional acceptance
d. ( is considered a constructi2e acceptor
3/.+ is the ma,er of a note for 3$%$$$ payable to " or bearer. " negotiated the
note to ?% ? to @% @ to A and A to +. Which is correct?
a. the note is discharged
b. the noted is not discharged since there is no payment
c. + cannot re3issued the note
d. The indorsers are not dischaged
39. ?rawer ' addressed a bill to ( payable to " or bearer for 9$%$$$ upon
demand. " negotiated the note to ?% ? to @% @ to A and A to -. Cpon proper
presentment% ( paid the bill. Which of the following is true?
LAW ON NEGOTIABLE INSTRUMENTS
a. the bill is discharged
b. persons secondarily liable are li,ewise discharged
c.the bill is not required to be presented for acceptance
d. all of the abo2e
=uggested 'nswers
1. a
2. a
3. a
1. a
/.d
9.d
;. d
<. d
0 d
1$. c
11. d
12. a
13. c
11. d
1/. d
19. d
1;. d
1<. d
10. a
2$. b
21. c
22. d
23. b
21. d
2/. c
29. b
2;. b
2<. b
20. c
3$. b
31. c
32. b
33. c
LAW ON NEGOTIABLE INSTRUMENTS
31. b
3/. a