Escolar Documentos
Profissional Documentos
Cultura Documentos
8. Check
9. Promissory Notes
10. Trade acceptance
Manila
P1000
Thirty days after date, pay to (unconditional order to pay) to
A or order the sum of One Thousand (P1000) Pesos. Value received and
charge the same account of
(Sgd.) B
To C
College, Sampaloc
Manila
LEGEND:
B drawer
C- drawee; not really a party to the bill, assumes liability ONLY when he
accepts the bill usually by writing the word ACCEPTED and signs his
name on the face where he becomes ACCEPTOR and NOT A DRAWEE.
By being this (acceptor), he becomes primarily liable like the MAKER of
a note; DRAWER is ONLY A SURETY then.
*The words (in BofE) CHARGE THE SAME TO THE ACCOUNT OF means
amount to be paid by DRAWEE is to be charged against the funds of
DRAWER. But this may be omitted.
2 IDEA & PURPOSE OF BofE
1. DRAWERs funds in hands of DRAWEE
2. Liability of DRAWEE for non-payment
- If DRAWEE refuses to accept when he has funds for purpose, he is
LIABLE TO DRAWER (not to PAYEE) for resulting damages & harm done
to his (DRAWER) credit.
-If DRAWER no funds in DRAWEE, presumed that DRAWER made
arrangements with DRAWEE so he will honor the bill. In such case,
DRAWEE must look to the DRAWER for reimbursement and NOT TO
BONA FIDE HOLDER.
Section 2 Certainty as to sum, what constitutes
Sum payable is SUM CERTAIN although paid:
- w/ interest
- by stated installments
- by stated installments w/ provision that upon default in payment of
any installment/interest, the whole shall become due
- w/ exchange, fixed/current rate
- w/ costs of collection/attorneys fee in case payment not made at
maturity
*If instrument calls for an ACT OTHER THAN payment of money NOT
NEGOTIABLE
*A note giving the MAKER the right to ascertain the AMOUNT payable
NON-NEGOTIABLE
*A promise to pay P1000 in two installments or in installments
NON-NEGOTIABLE
*Acceleration at option of HOLDER NON-NEGOTIABLE
*Acceleration at option of MAKER NEGOTIABLE
(The MAKER can avoid acceleration by paying the installments on their
due date)
*The promise/order to pay w/ exchange NEGOTIABLE
(EXCHANGE charge for providing funds, may be fixed/current rate; eg.
compensating balance)
*Payment in FOREIGN CURRENCY NEGOTIABLE
*Payment w/ EXCHANGE RATE NEGOTIABLE
- applicable only to foreign bills
*If payment not made at maturity, then there is ADDED amount due
(eg. Cost of collection, attorneys fee) NEGOTIABLE
*Attorneys fee may be REDUCED by courts if found UNREASONABLE; if
attorneys fee NOT specified, it shall be in REASONABLE SUM.
*A provision of to pay ALL costs, charges and expenses incurred by
PAYEE in ANY legal proceedings for collection of debt NONNEGOTIABLE
*Acquisition of instrument AFTER MATURITY
- a transferee acquiring an instrument when it is OVERDUE would NOT
BE HDC & would hold instrument subject to defenses, as if it were
NON-NEGOTIABLE.
Section 3 Promise is UNCONDITIONAL when:
- INDICATION of a particular fund out of w/c reimbursement is to be
made or particular account to be debited w/ the amount (NOT direct
source of payment, only source of reimbursement) - NEGOTIABLE
- statement of transaction w/c gives rise to instrument - NEGOTIABLE
- NO VALUE given
(eg. NO written for value received)
- NO PLACE where it is drawn or is payable
(An instrument that does not specify the place of payment is presumed
to be payable at the place/residence/business of MAKER/DRAWER.)
- WITH SEAL
- Designates a PARTICULAR KIND of current money as payment
(eg. I promise to pay A or order P1000 in Central Bank of fifty peso
bills.)
Section 7 Payable on DEMAND when:
- EXPRESSED to be payable ON DEMAND, at sight, or on presentation
- NO TIME for payment is expressed
(eg. Pay to A or order P1000)
Where the instrument is issued, accepted, or indorsed when OVERDUE,
it is, as regards the person so issuing, accepting, or indorsing it,
PAYABLE ON DEMAND.
*An OVERDUE instrument is a DEMAND paper. A HOLDER has
immediate right of payment for money promised/ordered to be paid.
Instead of ON DEMAND, other acceptable terms can be used:
- at sight (used in BofE)
- on presentation
- on call
- at anytime called for
*PAYABLE ON DEMAND as regards the MAKER (late issuance), the
ACCEPTOR (late received), the INDORSER (late indorsed)
Section 8 Instrument may be drawn PAYABLE TO THE ORDER of:
- PAYEE; not maker/drawer/drawee
- drawer
(eg. Pay to the order of myself P1000)
or maker
(eg. I promise to pay to the order of myself P1000)
- 2 or more PAYEES jointly
(eg. Pay to the order of A and B P1000)
The law speaks of MATERIAL PARTICULAR (blanks for date, due date,
name of PAYEE, amount, rate of interest) may be filled in. It has been
held that even the blank for the name of the DRAWER may be filled up.
*The authority to complete is not an authority to alter. So, the HOLDER
has NO AUTHORITY to change the amount after it has been filled in, or
to insert the words OR ORDER or OR BEARER after the name of the
PAYEE.
2. AUTHORITY TO PUT ANY AMOUNT
- A signature on a BLANK paper delivered in order to be converted into
a NI is a prima facie authority to fill it up as such for any amount.
3. RIGHT AGAINST PARTY PRIOR TO COMPLETION
- If an instrument is incomplete when delivered, the HOLDER has prima
facie authority to fill up the blanks thereon.
- If a blank paper is delivered by the person making the signature, the
HOLDER has prima facie authority to fill it up for any amount if the
person making the signature INTENDED TO CONVERT it into NI.
- In either case of the above (2) situations, the presumption is that the
BLANK was filled in ACCORDANCE W/ THE AUTHORITY GIVEN and W/IN
REASONABLE TIME.
4. RIGHT OF HDC
- not enforceable; personal defenses
- The rule is founded upon the principle that where one of 2 persons
must suffer by the bad faith of another, the loss must fall upon the one
who FIRST REPOSED confidence and made it possible for the loss to
occur.
Section 15 INCOMPLETE and UNDELIVERED (real defense)
When an INCOMPLETE instrument is UNDELIVERED, if completed &
negotiated w/o authority, be a VALID CONTRACT in the hands of ANY
HOLDER, as against any person whose signature was placed thereon
before delivery.
In the absence of any delivery, the instrument though complete in all
particulars, there is NO CONTRACT.
(2) RULES
1. DEFENSE EVEN AGAINST HDC
- Law is specific that instrument is NOT a VALID CONTRACT in the
hands of any HOLDER even HDC.
2. DEFENSE AVAILABLE TO PARTIES PRIOR TO DELIVERY
Pay to A
(Sgd.) P
Pay to B
(sgd.) A
Section 36 Restrictive indorsement:
RESTRICTIVE INDORSEMENT RESTRAINS the negotia-bility of
instrument for purpose or to the person stated therein.
a. Prohibits further negotiation of instrument.
(becomes NON-NEGOTIABLE)
Pay to A only
Pay to A and to no other person
Here, A is the only one authorized to receive payment.
b. Constitutes INDORSEE the AGENT OF INDORSER (AGENCY type:
AGENT NO TITLE to instrument; holds instrument as AGENT of
principal, the restrictive indorser subject to restrictive indorsement.)
Pay to B for collection
Pay to B for collection and remittance
Pay to B for collection only
Pay to B for deposit
c. Vests title in INDORSEE in TRUST for or use of some other person
(TRUST type: transfers TITLE to INDORSEE NOT FOR HIMSELF but in
trust of for BENEFIT of another person including INDORSER. The
INDORSEE CANNOT NEGOTIATE instrument for OWN BENEFIT BUT FOR
BENEFICIAL OWNER.)
Pay to C in trust for D
Pay to C as trustee for D
Pay to A for my use
Pay to C for the use of D
Mere absence of words of negotiability does NOT make the
indorsement restrictive.
*BUT if there are restrictive words stated like only, it prevents further
negotiation, become restrictive indorsement, and NON-NEGOTIABLE.