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NEGBANK

Promissory note: maker---payee; written promise to pay a sum of money

Bill of exchange: drawerdraweepayee; order made by a person to another to

pay money to a third person

Section 1. forms of negotiable instrument. An instrument to be negotiable must

conform to the following requirements:

a. it must be in writing and signed by the maker or drawer-it can be written anywhere because it can be transferred either through

constructive (symbolic) delivery or actual delivery

- It cannot be ORAL

-any mark is sufficient as a substitute for the signature of the maker ordrawer as long as the intention of the person is to be bound by the

contract

b. must contain an unconditional promise or order to pay a sum certain inmoney

- not coupled a condition (if) *must be certain and not subject tocontingency even though it has happened, it is still non negotiable

- must be in a sum certain in money because money is used as thestandard of exchange- *an indication of a particular fund out of which reimbursementis tobe made or a particular account to be debited with amount

- *a statement of the transaction which gives rise to the instrument- an order or promise to pay out of a particular fund is not

unconditional because it is highly dependent on whether the account

has money or not

- certainty as to sum: with interest, stated installments, stated installswith a provision that if not paid the whole amount will be due, with

exchange (fixed or current rate), with costs of collection or an

attorneys fee in case payment shall not be made at maturity

*holder should be able to determine from the instrumentthe amount he is entitled to receive at maturity

*if the instrument calls for an act other than the payment of

money, it is non negotiable (must be substitute for money)

*promissory note giving the maker the right to ascertain

the amount payable is non negotiable

*stated installments must contain: the interest of each

installment and the date of each installment must be fixed

in the instrument ( a promise to pay in installments without

a date does not fulfill the requirements of the law)

-if a note provides for acceleration at the option of the holder, the insrumentis non negotiable

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-a provision for payment of a sum in a foreign currency does not impair

negotiability

c. must be payable on demand or at a fixed or determinable future time- determinable future time: fixed period after date or sight, on or before

a fixed determinable future time specified therein, on or at a fixed

period after the occurrence of a specified event which is certain to

happen, though the time of happening be uncertain

- *an instrument payable upon a contingency is not negotiable, and thehappening of the event does not cure the defect

- in case of demand/sight instrument: the holder may call for paymentat anytime; term/time instrument: payable upon arrival of the time

for payment

- *after sight- after the instrument is seen by the drawee uponpresentment of acceptance- a bill or note payable several days before the occurrence of a the

specified event is not negotiable since the date of maturity of the

instrument can only be ascertained after it has become overdue (the

time of payment therefore is uncertain)

- must be payable on demand: when it is expressed to be payable ondemand or at sight, or on presentation; in which no time for payment

is expressed (when it is overdue, it is regarded as to ne payable on

demand)

d. must be payable to order or bearer-it maybe drawn payable to the order of: anyone(not maker, drawer or

drawee), drawer or maker, drawee, two or more payees jointly (and), one

or more several payees (or), the holder of an office for the time being

- order or _________; the order of ________

-payable to bearer when: It is expressed to be so payable, it is payable to a

person named therein or bearer, it is payable to the ORDER of a

fictitious/non existing person (and such fact was known to the person

making it so payable), when the name of the payee does not purport to be

the name of any person, when the only/last indorsement is an

indorsement in blanke. where the instrument is addressed to a drawee, he must be named or

otherwise indicated therein with reasonable certainty