Midterm Examinations

NEGOTIABLE INSTRUMENTS LAW

October 10, 2017
10AM 1PM

NAME : ______________________________________________
SIGNATURE : ______________________________________________
SECTION : ______________________________________________

INSTRUCTIONS

1. This Questionnaire contains 4 pages including this Instructions

page. Check the number of pages and the page numbers at the
lower right hand corner of each page of this Questionnaire and
make sure it has the correct number of pages.

2. This Questionnaire has 35 Questions to be answered within three

(3) hours.

3. The Questions are worth 100 Points of the whole examination.

4. Your answers should be written on separate Answer Sheets.

Write your answers only on the front, not the back page.

5. Read each question very carefully and write your answers in the
same order the questions are posed.

6. Note well the allocated POINTS for each number or question.

In your answers, use the numbering system in the questionnaire.
A Yes or No answer without explanation does not carry any
point.

7. Answer all questions legibly, clearly and concisely.

8. After answering all the questions, please hand over the

ANSWER SHEETS to the instructor or proctor assigned in your
room.

GOODLUCK!

1
1. Is date essential to make an instrument negotiable? (1 Point)

2. When is date important? (3 Points)

3. If an instrument is undated, when may date be inserted? (2 Points)

4. What are the effects of insertion of wrong date? (4 Points)

5. When is an instrument Ante-Dated and when it is Post-Dated? (2

Points)

6. Who has the authority to fill up the blanks in an incomplete but

delivered instrument? (1 Point)

7. What is the rule when an instrument is incomplete and undelivered?

(2 Points)

8. What about the party whose signature was placed after delivery?
(1 Point)

9. Can a Holder in Due Course hold a maker for instruments which are
incomplete and undelivered supposing that the note was stolen,
filledup, and was subsequently negotiated? (1 Point)

10. When is an instrument incomplete? (1 Point)

11. Lorenzo signed several blank checks instructing Nicky, his secretary,
to fill them as payment for his obligations. Nicky filled one check
with her name as payee, placed P30,000.00 thereon, endorsed and
delivered it to Evelyn as payment for goods the latter delivered to
the former. When Lorenzo found out about the transaction, he
directed the drawee bank to dishonor the check. When Evelyn
encashed the check, it was dishonored. Is Lorenzo liable to Evelyn?
(3 Points)

12. What is the rule when an instrument is incomplete and undelivered?

(2 Points)

13. What are the rules of construction in case of ambiguities in a

negotiable instrument? (7 Points)

14. Who are the persons liable on an instrument? (6 Points)

15. What are the legal effects of an agents signature in a negotiable

instrument? (2 Points)
2
16. What are the effects of an infant or corporations indorsement? (4
Points)

17. What is the effect when there is forgery? (3 Points)

18. Can a drawer, from whom checks were stolen but failed to report
the same to the authorities or the drawee bank, recover the value
of the checks paid by the drawee bank on the forged checks which
was stolen from the drawer? (1 Point)

19. What is consideration? (1 Point)

20. What is meant by failure of consideration? (1 Point)

21. Who is an accommodation party? (1 Point)

22. When is an instrument negotiated? (1 Point)

23. What are the methods of negotiation? (2 Points)

24. What is an indorsement? (1 Point)

25. What are the classes of holders? (3 Points)

26. Who is a holder in due course (HIDC)? (4 Points)

27. What are the effects of an infant or corporations indorsement? (8

Points)

28. Discuss the legal consequences when a bank honors a forged check.
(8 Points)

29. What is the effect when an order instrument was delivered without
indorsement? (2 Points)

30. X draws a check against his current account with Bonifacio Bank in
favor of B. Although X does not have sufficient funds, the bank
honors the check when it is presented for payment. Apparently, X
has conspired with the bank's bookkeeper so that his ledger card
would show that he still has sufficient funds. The bank files an action
for recovery of the amount paid to B because the check presented
has no sufficient funds. Decide the case. (3 Points)

3
31. On the right bottom margin of a PN appeared the signature of the
corporations president and treasurer above their printed names
with the phrase and in his personal capacity. The corporation
failed to pay its obligation. Are the officers liable? (2 Points)

32. A issued a promissory note payable to B or bearer. A delivered the

note to B. B indorsed the note to C. C placed the note in his drawer,
which was stolen by the janitor X. X indorsed the note to D by
forging C's signature. D indorsed the note to E who in turn delivered
the note to F, a holder in due course, without indorsement. Discuss
the individual liabilities to F of A, B and C. (9 Points)

33. What is presentment for payment (PP)? (1 Point)

34. How should presentment be made? (3 Points)

35. What are the requisites for a sufficient PP? (4 Points)

-end-

PREPARED BY:

LEOVIGILDO M. DAYOJA
Instructor

APPROVED

RAMON GEORGE O. ATENTO

Dean, CBA