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PRELIMINARY EXAMINATION
LAW 3
LAW ON NEGOTIABLE INSTRUMENTS
MULTIPLE CHOICE:
1. The following are essential requisites of a negotiable promissory note except
a. must be written and signed by the drawer
b. must contain an unconditional promise to pay a sum certain in money
c. must be payable upon fixed determinable future time.
d. must be payable to order or bearer
2. Which of the following is not an essential element of a bill of exchange?
a. must be written and signed by the drawee
b. must contain an unconditional promise to pay a sum certain in money
c. must be payable to order or bearer
d. drawee must be named therein
3. The following are negotiable except
a. Pay to bearer Jose Cruz P 10,000 upon demand, signed by A and addressed to B
b. Pay to Jose Cruz or bearer P 10,000 upon demand, signed by A and addressed to B
c. I oblige myself to pay Pedro Reyes or order P 3,000 ten days after day signed by M as
maker.
d. Good to L or order P 5,000 July 1, 2009 signed by M as maker
4. Which of the following is negotiable?
a. I promise to pay Jose Cruz or order P 10,000 or deliver 1 cow 20 days after date at
the option of the holder signed by M as maker
b. Pay to Pedro Reyes or bearer P 10,000 or deliver 1 cow on 4-4-10 at the option of the
drawee, signed by A and addressed to B
c. Pay to Pedro C. Cruz or order P 5,000 out of fund I deposited with you signed by A
and addressed to B
d. I promise to pay K. KHO or order P 10,000 in 5 installments, first installment August
1, 2009 and every month thereafter, signed by M as maker
5. The following are functions of negotiable instrument; except:
a. used as substitute for money
b. medium of credit transactions
c. medium of exchange for commercial transactions
d. none of them.
6. Which of the following is no an incident in the life of negotiable instrument?
a, Issue
c. Preparation
b. notice of dishonor
d. Negotiation
7. Which of the following is negotiable?
a. Postal Money order
b. Certificate of stock
c. Treasury warranty
d. None of them
d. nonnegotiable, because the exact payment date cannot be determined from the face of
the instrument.
32. Sam signs an instrument in which he promises to pay one thousand feet of digital cable to
Jill on May 1. This instrument is
a. negotiable.
b. nonnegotiable, because digital cable is not a medium of exchange authorized or
adopted by a domestic or foreign government as part of its currency.
c. nonnegotiable, because it does not indicate a specific brand of digital cable.
d. nonnegotiable, because it states a specific date on which it is payable.
33. Al has a negotiable instrument that does not indicate when it is to be paid. When is it
payable to Al?
a. Immediately
b. in 30 days
c. in a reasonable time
d. Never--the instrument is void if it does not have a payment date.
34. Al loans Peg 1,000, and Peg agrees to repay him 200 per month for six months. The
agreement contains an acceleration clause that may be invoked if any payment is missed.
Peg makes one payment, and then defaults. What amount is due to Al immediately?
a. 0
b. 200, for the missed payment
c. 800, the remaining balance of the loan
d. 1,000, the remaining balance of the loan, plus interest
35. Alan writes a check. In the box on the check, he writes "40.00." In the blank on the
check, he writes, "Thirty pesos and 0/100." For how much may the holder cash the
check?
a. 30
c. 35
b. 40
d. 0
36. Josephine owes 7,000 in unpaid taxes. Using the flank of her prized sow, she executes an
instrument for 7,000 that otherwise meets the requirements for negotiability. This
instrument is likely...
Which of the following is true?
a. Negotiable
b. Nonnegotiable, because a pig is not monetary.
c. Nonnegotiable, because the government does not appreciate such a gesture.
d. Nonnegotiable because an instrument must be on paper so that it may be processed
efficiently in the banking system.
37. Rita signs a promissory note for 10,000 in favor of Phil. University. The note does not
specify the date of its payment. Rita defaults. In PUs suit to collect on the note, the court
will most likely rule in favor of
a. Rita, because PU assumed the risk that the note would not be paid.
b. Rita, because the note is not payable at a definite time or on demand.
c. PU, because the note is an unconditional promise to pay the holder.
d. PU, because there is a uniform default time for repayment when a date is not
specified.
38. When two people sign a note, they are known as co-payees
a. True
b. False
c. Maybe
d. Sometimes
Partly Negotiable
b. Non-Negotiable
d. None of the above
45. I promise to pay X or order the sum of 200 on Oct 1, 2014. Sgd. M
46. I agree to pay X or order the sum of 200 on Oct 1, 2014. Sgd M
47. I oblige myself to pay X or order the sum of 200 on Oct 1, 2014. Sgd M
48. I commit to pay X or order the sum of 200 on Oct 1, 2014. Sgd M
49. I shall pay X or order the sum of 200 on Oct 1, 2014. Sgd M
50. I will pay X or order the sum of 200 on Oct 1, 2014. Sgd M
51. I acknowledge that I owe X or order the sum of 200 on Oct 1, 2014. Sgd M
52. Pay to X or order the sum of 100 and reimburse yourself from my salary. Sgd M To: Y
53. Pay to X or order the sum of 100 and debit the amount from my bonus. Sgd M To: Y
54. Pay to X or order the sum of 100 which is payment for the shoes I purchased. Sgd. M
55. Pay to X or order the sum of 100 from my allowance. Sgd M To: Y
56. I promise to pay S or order the sum of 100 on demand. Sgd. M
57. I promise to pay S or order the sum of 100 at sight. Sgd. M
58. I promise to pay S or order the sum of 100 upon presentation. Sgd. M
59. I promise to pay S or order the sum of 100. Sgd. M
60. I promise to pay S or order the sum of 100 on December 18, 2014. Sgd. M
61. Pay to S or order the sum of 100 30 days after date. Sgd. M
62. Pay to S or order the sum of 100 30 days after sight. Sgd. M
63. Pay to S or order the sum of 100 on or before Oct. 1, 2012. Sgd. M
64. Pay to S or order the sum of 100 30 days after the death of A. Sgd. M
65. Pay to S or order the sum of 100 30 days before the death of A. Sgd. M
66. Pay to S or order the sum of 100 30 days after he graduates. Sgd. M
67. I promise to pay S or order the sum of 100. Sgd. M
68. Pay to the order of myself the sum of 500. Sgd. M
69. Pay to the order of yourself the sum of 500. Sgd. M
70. Pay to the order of A, B. and C the sum of 500. Sgd. M
71. Pay to the order of A, B, or C the sum of 500. Sgd. M
72. Pay to the order of the President of X Corp the sum of 1,000 on August 1, 2015. Sgd. M
73. Pay to bearer the sum of 5,000 on demand. Sgd. M
74. I promise to pay P or bearer the sum of 5,000. Sgd. M
75. Pay to the order of CASH 10,000. Sgd. M
76. I promise to pay to the order of Pablo Patricio the sum of 10,000. Sgd.M
At the back of instrument, Pablo Patricio merely signed as follows. Sgd. Pablo Patricio
77. A bill of exchange to which no document is attached when presentment for payment or
acceptance is made.
a. Trade acceptance
c. Clean Bill of Exchange
b. Bank Acceptance
d. Documentary Bill of Exchange
78. Payable to specified person.
a. Pay to B or his agent 1,000
b. Pay to B or his assigns 1,000
c. Pay to B or his indorsees 1,000
d. None of the above
79. A note as distinguished from a bill of exchange
a. It contains an unconditional order
b. The one who issues it is primarily liable
c. The one who issues it secondarily liable
d. There are 3 parties
80. Managers check may be treated and considered a promissory note because
a. The drawer and drawee are the same persons
b. The drawee is fictitious
c. The instrument is ambiguous
d. Answer not given
81. Not unconditional order to pay
a. To pay out of a particular fund
b. To pay and charge against a particular fund
c. Both a and b
d. None of the above
82. A feature or characteristics of a bill of exchange not found in a promissory note
a. Promise to pay
b. Order to pay
c. Promise in writing to pay
d. Unconditional promise in writing