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Finals for Nego 1

Section 24. Presumption of consideration.


Every negotiable instrument Section 25. Value, what constitutes.
- is deemed prima facie Value
to have been issued - is any consideration sufficient
for a valuable consideration; to support a simple contract.

- and every person An antecedent or pre-existing


whose signature appears thereon to have become debt constitutes value;
a party thereto for value.
and is deemed such whether the instrument is payable on
Q: What is consideration? demand or at a future time.

A: It is the cause of the contract; it is the essential reason why a party


Q: What is value?
enters into a contract.
A: It is any consideration sufficient to support a simple contract.
It refers to what one party gets in return for transferring his right or
agreeing to comply with an obligation. Q: What may consist of valuable consideration?

As an applied in negotiable instruments, the consideration refers to the A: It consists of some:


cause why the maker or drawer issued and why the indorser transferred right, interest, profit or benefit
the instrument or what they got in return for issuing or transferring as the accruing to the party
case may be.
who makes the contract,
NOTE: The NIL does not only require that there is consideration. There
must be a valuable consideration. or some forbearance, detriment, loss, responsibility, act, labor or
service,
Q: What are the 2 presumptions under this section? on the other side.

A: It is an obligation to do, or not to do


1. Every negotiable instrument is in favor of the party
deemed prima facie to have been issued - who makes the contract,
such as the maker or indorser.
for a valuable consideration
Onerous consideration only
2. Every person whose signature appears
on the instrument is presumed NOTE: Consideration founded on love, affection or gratitude is not a
to have become a party thereto for value. valuable consideration cannot be enforced between the original parties.
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instrument issued or negotiated to him.


Q: Should consideration be adequate?
Where value has at any time been given for the instrument, the holder is
A: Valuable consideration need not be adequate as long as it is a valuable also deemed a holder for value with respect to all parties who become
one inadequacy is a personal defense (Sec58, NIL). such prior to that time.

Q: Can antecedent debt be considered as a valuable consideration? Examples:


Why? 1. Bebeng issued a promissory note for P8000 payable to the order of CJ
for a cellphone which CJ delivered to Bebeng. CJ is a holder for value
A: Antecedent or Pre-existing debt is a valuable consideration but it must
be shown that the holder has given up the pre-existing debt or the right to because he has given a valuable consideration.
sue.

Reasons: 2. Bebeng, maker; CJ, payee of an order promissory note for P10,000.
1. Creditor realizes or secures his debt and holds The note is indorsed by CJ to Ayel for a camera which Ayel delivered
prolonged or forbear from taking any legal steps to enforce his rights to CJ. Ayel is a holder for value because he has given a valuable
consideration (camera)
2. Debtor has the advantage of making his
negotiable instrument of equivalent value
3. M issues a PM payable to the order of for P5000 without valuable
to cash
consideration. P indorses that note to A, A to B, and B to H who gives
P5,000 for the note indorsed to him. H is a holder for value not only
with respect to B to whom he gave a valuable consideration but also
with respect to M, P and A.
Section 26.
What constitutes holder for value.
- Where value has at any time 4. M issues a PM payable to the order of P for P5000. P indorses that
been given for the instrument, note to A, A to B, and B to C who is known to have given value to B
for the note indorsed to him. Later C indorsed the note to H as gift.
- the holder is deemed a holder for value in respect to all
parties As regards M, P, A and B, H is a holder for value because they
became parties to the note prior to the time that value has been given
- who become such prior to that time. by C to B. As regards C, H is not a holder for value because he
received the note as a gift and thus did not give any consideration
Q: What is the concept of holder for value? therefor.
A: A holder for value is one who has given valuable consideration for an
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Q: Is a bank a holder for value?

A: No, a bank is not a holder for value. The bank deposits are governed
by the provisions on simple loan. As creditor-depositor, one does not
expect to receive identical money in return but an identical sum.

Section 27. When lien on instrument constitutes


holder for value. Where the holder has a lien on
the instrument arising either from contract or by
implication of law, he is deemed a holder for value to
the extent of his lien.

Q: What is lien?
A: It is a right to retain the possession of the property of
another until the owner pays his debt to the holder. It is a
charge against or interest in property to secure payment of a
debt or performance of an obligation.

Q: Is lien a valuable consideration?


A: Yes. Where the holder has a lien on the instrument either
arising from contract or by implication of law, he is deemed a
holder for value to the extent of his lien