Business+Law+Negotiable+Instruments+Philippines3

Business+Law+Negotiable+Instruments+Philippines3 -...

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ACT NO. 2031 February 03, 1911 THE NEGOTIABLE INSTRUMENTS LAW I. FORM AND INTERPRETATION Section 1. Form of negotiable instruments. - An instrument to be negotiable must conform to the following requirements: (a) It must be in writing and signed by the maker or drawer; (b) Must contain an unconditional promise or order to pay a sum certain in money; (c) Must be payable on demand, or at a fixed or determinable future time; (d) Must be payable to order or to bearer; and (e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. What are the requisites for a negotiable note? A Promissory note, to be negotiable , must conform to the following requirements: 1. it must be in writing and signed by the maker; 2. Must contain an unconditional promise to pay a sum certain in money 3. must be payable on demand or at a fixed or determinable future time 4. must be payable to order or bearer What are the requisites of a negotiable bill? A bill of exchange, to be negotiable, must conform to the following requirements: 1. in writing and signed by the drawer 2. contain an unconditional; order to pay a sum certain in money 3. payable on demand or at a fixed or determinable future time 4. payable to order or bearer 5. the drawee must be named or otherwise indicated therein with reasonable certainty What is meant by “in writing” and signed by the maker or drawer?” The instrument must in writing for if it were not there would be nothing to be negotiated or passed from hand to hand. The medium in which it is written and where it is written is not important. It may be in ink, print or pencil. It may be in parchment, cloth, leather or any other substitute of paper. What is important is it is in writing and such writing is capable of being transferred or negotiated. (e.g. A note written on a blackboard is not negotiable). In signing, the maker thereby binds himself to be liable for the note (Sec. 18) It may be the maker’s full name or his surname only or signature. It may be in initials or numbers. But , where the name is not signed, the holder must prove that what is written is intended as the signature of the person sought to be charged. In fact, for as long as it be shown that such was adopted and used by the maker as his signature, it is sufficient. (Note: he who makes it possible for the commission of fraud, bears the loss). What is meant by “an unconditional promise/order to pay a sum certain in money?” The promise to pay must be on the note itself although it is not necessary to use the word “promise.” It is enough that 1. equivalent words be used such as “agree”, “will pay”, “shall pay”; or that 2. words implying a promise are contained in the instrument such as “Good to” or “payable on demand” (e.g. Good to X or order P10.) Mere acknowledgement of a debt is not enough but an acknowledgment followed by the phrase “to be paid” implies a
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Business+Law+Negotiable+Instruments+Philippines3 -...

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