NEGO FINALS NOTES

Real Defenses

FF-CADE-MM-WIWI

Forgery
Fraud in Factum

Ultra Vires act of a Corporation
Alteration
Duress amounting to Fraud
Execution of an instrument between public Enemies

Minority
Marriage

Want of authority of an agent
Incapacity to Contract
Want of Delivery of an Incomplete Instrument
Illegal Contract

Requisites for a Bill of Exchange to be Negotiable:

WUD-N
1. It must be in writing and signed by the
DRAWER
2. Must contain an unconditional ORDER to pay
a sum certain in money
3. Must be payable on demand, or at a fixed,
determinable future time
4. The drawee must be named or otherwise
indicated therein with a reasonable certainty
Requisites for a Promisory Note to be Negotiable:

WUD
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,
determinable future time
Requisites in order for an agent to avoid personal
liability over an instrument:

1. Indicates that he is signing as an agent
2. He must be authorized
3. Disclose his principal
3 Functions of a Document of Title
R-C-T
1. Evidence of Receipt
2. Evidence of Contract
3. Evidence of Title
Sec. 23. Forged signature; effect of. - When a
signature is forged or made without the authority of
the person whose signature it purports to be, it is

wholly inoperative, and
no right to retain the instrument, or
to give a discharge therefor, or to
enforce payment thereof
against any party thereto,

can be acquired through or under such signature,

unless the party against whom it is sought to enforce
such right is precluded from setting up the forgery or
want of authority.



Section 52. Holder in due course - has taken the
instrument under the following conditions:

[C-O-G-N]

(a) That it is complete and regular upon its face;

(b) That he became a holder of it before it was
overdue, and without notice that it had been
previously dishonored, if such was the fact;

(c) That he took it in good faith and for value;

(d) That at the time it was negotiated to him, he had
no notice of any infirmity in the instrument or defect
in the title of the person negotiating it.

Section 88. Payment in due course

MHGN
1. At or after maturity
2. To the holder
3. Good faith
4. No notice of defect of title of the holder

Section 60. Maker
Undertakes: to pay the note according to its tenor
Warrants: (1) payees existence; (2) payees capacity to
endorse

Section 61. Drawer

Undertakes that:
1. On presentment, the bill will be accepted,
paid, or both
2. If dishonored, he will pay the holder or any
endorser who is made to pay it; but he has the

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option, by stipulation, to disclaim liability for
dishonor of the bill.
Section 62. Acceptor

Undertakes that the bill will be paid according
to its tenor of the acceptance.









Section 65. Qualified Endorses / Negotiation
by mere delivery. Warranties:

G-T-C-K
(1) the genuineness of the instrument;
(2) that he has good title to it;
(3) all prior parties have capacity to contract; and

(4) he has no knowledge of any fact that would
impair the validity of the instrument.

But when the negotiation is by delivery only, the
warranty extends in favor of no holder other than the
immediate transferee.

*a qualified endorser does not warrant the financial
responsibility of the parties to that instrument.

Section 66. General Endorses Warranty:

G-T-C-V +P
1. the genuineness of the instrument;
2. that he has good title to it;
3. all prior parties have capacity to contract; and

4. That the instrument is, at the time of his
indorsement, valid and subsisting.

5. he engages that, on due presentment, it shall
be accepted or paid or both, as the case may
be, according to its tenor, and that if it be
dishonored and the necessary proceedings on
dishonor be duly taken, he will pay the
amount thereof to the holder, or to any
subsequent indorser who may be compelled to
pay it.

Presentment for Payment
Manner:
HHPP
1. made by the holder or a person authorized
2. at a reasonable hour on a business day
3. proper place
4. to person primarily liable on the instrument,
or if he is absent or inaccessible, to any person
found at the place where the presentment is
made.

Presentment for Acceptance
needed when: (sec 148)
1. payable after sight
2. need is expressly stated
3. bill is drawn payable elsewhere than at the
residence of place of business of the drawee
*to charge parties secondarily liable
Not needed when:
D-A-F-I D-OG-E
1. drawee is dead, incapacitated, absconded or a
fictitious person. (DAFI)
2. after the exercise of reasonable diligence,
presentment cannot be made (D)
3. although presentment has been irregular,
acceptance has been refused on some other
ground. (OG)
4. he has no right to expect that the instrument
is to be paid.
relative exception: if the endorser is an
accommodated party (same as no. 4 but see sec.
80)

Notice of Dishonor

*may be waived whenever (sec 111)

Section 112 notice is dispensed with if after
reasonable diligence it cannot be given to or does not
reach the person sought to be charged.

Generally: Waiver and Exercise of reasonable
diligence = Excuse

DRAWER-No need for notice

SFI-PEC
1. drawer and drawee are one and the same
person;
2. drawee is a fictitious or incapacitated person;
3. drawer is the person to whom the instrument
is presented for payment;

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4. drawer has no right to expect or require that
the drawee or acceptor will honor the
instrument; and
5. where the drawer has countermanded
payment.

ENDORSER- No need for notice
FI-PA

1. drawee is a fictitious of incapacitated person
and the endorser is aware of such fact at the
time of his endorsement;
2. endorser is the person to whom the
instrument is presented for payment; and
3. the instrument was made or accepted for his
accommodation.
Section 116 When notice of dishonor by non-
acceptance has been given, notice of a subsequent
dishonor by non-payment is not necessary unless in
the meantime the instrument has been accepted.

Section 117 Omission to give notice of non-
acceptance does not prejudice a holder in due course
subsequent to the omission.



Protest

Foreign bills- Protest is required

Inland bills payable and draw in ph, all others are
foreign bills.


Acceptance

Actual
1. writing
2. signed by drawee
3. Must not express that the drawee will perform
his promise by means other than the payment
of money.
Holder may require the acceptance be written the bill
itself, if rejected he may treat the bill as dishonored.
(sec. 133.)
Retention within 24 hours is equivalent to an
acceptance.
Destroying the instrument = acceptance.
Late acceptance is with retroactive effect