MODULE_2_AE312.pdf - Saint Louis University SCHOOL OF...

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Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited. Saint Louis University SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING AND INFORMATION STUDIES Department of Business Laws and Taxation 1 By: Atty. Rosemarie Pitan-Areno,CPA,MBA NEGOTIABLE INSTRUMENTS LAW ACT NO. 2031 Negotiable Instruments written contracts for the payment of money; by its form, intended as a substitute for money and intended to pass from hand to hand, to give the holder in due course the right to hold the same and collect the sum due. Characteristics of Negotiable Instruments: 1. negotiability right of transferee to hold the instrument and collect the sum due 2. accumulation of secondary contracts instrument is negotiated from person to person Difference between Negotiable Instruments and Non-Negotiable Instruments: Negotiable Instruments Non-negotiable Instruments Contains all the requisites of Sec. 1 of the NIL does not contain all the requisites of Sec. 1 of the NIL Transferred by negotiation transferred by assignment Holder in due course may have better rights than transferor transferee acquires rights only of his transferor AE 312 MODULE UNIT 2:
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited. Saint Louis University SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING AND INFORMATION STUDIES Department of Business Laws and Taxation 2 By: Atty. Rosemarie Pitan-Areno,CPA,MBA Prior parties warrant payment prior parties merely warrant legality of title Transferee has right of recourse against intermediate parties transferee has no right of recourse Difference between Negotiable Instruments and Negotiable Documents of Title Negotiable Instruments Negotiable Documents of Title Have requisites of Sec. 1 of the NIL does not contain requisites of Sec. 1 of NIL Have right of recourse against intermediate parties who are secondarily liable no secondary liability of intermediate parties Holder in due course may have rights better than transferor transferee merely steps into the shoes of the transferor Subject is money subject is goods Instrument itself is property of value instrument is merely evidence of title; thing of value are the goods mentioned in the document Kinds of Negotiable Instruments: 1. Promissory note 2. Bill of exchange Promissory Note unconditional promise to pay in writing made by one person to anther, signed by the maker, engaging to pay on demand or a fixed determinable future time a sum certain in money to order or bearer. When the note is drawn to maker’s own order, it is not complete until indorse by him. (Sec. 184 NIL) Parties:

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