Академический Документы
Профессиональный Документы
Культура Документы
___11. Notice of dishonor is not required to be made in all cases. One instance where such notice is not necessary is
when the indorser is the one to whom the instrument is suppose to be presented for payment. The rationale here is that
the indorser
a. Already knows of the dishonor and it makes no sense to notify him of it
b. Is bound to make the acceptance in all cases
c. Has no reason to expect the dishonor of the instrument
d. Must be made to account for all his actions
___12. Which of the following indorsers expressly warrants in negotiating an instrument that 1) it is genuine and true; 2)
he has good title to it; 3) all prior parties have capacity to negotiate; and 4) it is valid and subsisting at the time of his
indorsement?
a. Irregular indorser
b. Regular indorser
c. General indorser
d. Qualified indorser
___13. Forgery of bills of exchange maybe subdivided into a) forgery of an indorsement on the bill and b) forgery of the
drawers signature, which may either be with acceptance by the drawee, or
a. With acceptance but the bill is paid by the drawee
b. Without acceptance but the bill is paid by the drawer
c. Without acceptance but the bill is paid by the drawee
d. With acceptance but the bill is paid by the drawer
___14. The rule is that the intentional cancellation of a person secondarily liable results in the discharge of the latter. With
respect to an indorser, the holders right to cancel his signature is
a. Without limitation
b. Not limited to the case where the indorsement is necessary to his title
c. Limited to the case where the indorsement is not necessary to his title
d. Limited to the case where the indorsement is necessary to his title
___15. P authorized A to sign a bill of exchange in his (Ps) name. The bill reads: Pay to B or order the sum of P1M.
Signed A. (for and in behalf of P) The bill was drawn to P. B indorsed the bill to C, C to D, and D to E. May E treat the bill
as a promissory note?
a. No because the instrument is payable to order and has been indorsed several times
b. Yes because the drawer and drawee are one and the same person
c. No because the instrument is a bill of exchange
d. Yes because A was only an agent of P
___16. Z wrote out an instrument that states Pay to X the amount of P1M for collection only. Signed Z. X indorsed it to
his creditor, Y, to whom he owed P1M. Y now wants to collect and satisfy Xs debt through the P1M on the check. May he
validly do so?
a. Yes since the indorsement to Y is for P1M
b. No since Z is not party to the loan between X and Y
c. No since X is merely an agent of Z, his only right being to collect
d. Yes since X owed Y P1M
___17. In signature by procuration, the principal is bound only in case the agent acted within the actual limits of his
authority. The signature of the agent in such a case operates as notice that he has
a. A qualified authority to sign
b. A limited authority to sign
c. A special authority to sign
d. Full authority to sign
___18. X issued a check in favor of his creditor, Y. It reads Pay to Y the amount of Seven Thousand Hundred Pesos (Php
700,000) Signed X. What amount should be construed as true in such a case?
a. Php 700,000
b. Php 700
c. Php 7,000
d. Php 700,100
___19. P authorized A to sign a negotiable instrument in his (Ps) name. It reads: Pay to B or order the sum of P1M.
Signed A. The instrument shows that it was drawn on P. B then indorsed to C, C to D, and D to E. E then treated it as a
bill of exchange. Is presentment for acceptance necessary in this case?
a. No since the drawer and drawee are the same person
b. No since the bill is non-negotiable, the drawer and drawee being the same person
c. Yes since the bill is payable to order, presentment is required for acceptance
d. Yes in order to hold all persons liable on the bill
___20. In an obligation to give a determinate thing, what rights are available to the creditor?
I. To compel specific performance
II. To recover damages in case of breach of the obligation
III. To ask that the obligation be complied with at the expense of the debtor
a. All answers are correct
c. I is correct
b. I and II are correct
d. All answers are wrong
___44. Where the instrument has been dishonored in the hands of an agent, which of the following is not correct?
a. The agent may give notice to the parties liable thereon
b. If the agent gives notice to his principal, he must do so within the same time as if he were the holder
c. The principal may also give notice within the same time as if it were dishonored in his hand
d. The principal, upon the receipt of notice from his agent, has the same time for giving notice as if the agent had
been an independent holder.
___45. To whom notice of dishonor should be given?
I. Where the parties to be notified are partners, notice to any one partner is notice to the firm, even though there
has been dissolution.
II. Notice to persons jointly liable who are partners must be given to each of them unless one of them has
authority to receive such notice for the others.
a. True, True
b. False, False
c. True, False
d. False, True
___46. Notice of dishonor is not required to be given to the drawer in the following cases, except
a. Where the drawer is the agent of the drawee and the drawee dishonored the instrument
b. Where the drawer closed his account with the drawee bank
c. Where the drawee is a minor
d. Where the bill was renegotiated to the payee
___47. A issued a negotiable bill of exchange payable to the order of B. Subsequent indorsements are: B to D, D to E,
and E to F. When F presented the instrument for acceptance, the drawee dishonored the instrument. F gave notice of
dishonor to D. Later F indorsed the bill to G who likewise indorsed the bill to H, a holder in due course. If the bill is again
dishonored by non-acceptance in the hands of H, which of the following is correct?
a. D, F and F are liable to H even if notice of dishonor are not given to them
b. The notice previously given to D inures to the benefit of E, F, G and H
c. F can collect from E if H required F to pay him
d. A, B and E were previously discharged hence, H should give notice of dishonor to F and E
___48. He is a party on the face of the bill and yet is not yet liable.
a. Drawer
b. Drawee
c. Acceptor
d. Indorser
___49. M issued a negotiable promissory note to the order of P. P indorsed and delivered the note to A. A, in turn indorsed
and delivered the note to B and B, later negotiated the note to C. On due date, C did not present the note to M for
payment. Later, C went to court and sued M and the indorsers. Will the case against them prosper?
a. Yes, because M as maker is primarily liable and the indorsers are secondarily liable
b. No because C should first make a presentment for payment to M
c. Yes in so far as M is concerned but no in so far as the indorsers are concerned
d. No in so far as M is concerned but yes in so far as the indorsers are concerned
___50. In payment of merchandise purchased by A from B, A made a promissory note which reads: I promise to pay B
P100,000. Sgd. A. B indorsed and delivered the note to C. later, Y stole the note and indorsed and delivered it to D, who
acquired it in good faith. When D presented the note to A, A paid the note in good faith. As a result
a. The obligation of A is extinguished
b. C should collect from B
c. C can collect from A and if A will not pay, C can collect from B
d. C can collect from A but not from B
___51. Using the preceding number but the promissory note reds I promise to pay B or order P100,000. Sgd. A.
a. The obligation of A is extinguished
b. C should collect from B
c. C can collect from A and if A will not pay, C can collect from B
d. C can collect from A but not from
___52. Using the preceding number, but the promissory note reads I promise to pay B or bearer, P100,000. Sgd. A.
a. The obligation of A is extinguished
b. C should collect from B
c. C can collect from A and if A will not pay, C can collect from B
d. C can collect from A but not from B
___53. A issued a negotiable promissory note payable to bearer. He delivers the note to B. B indorsed the note especially
to C, then C negotiates the note by delivery to D. Which of the following is not correct?
a. D can enforce the note against C
c. D can enforce the note against A
b. D can enforce the note against B
d. C can enforce the note against B
___54. This is not a requisite of a valid acceptance for honor
a. There must be consent of the holder
b. The acceptor for honor is partly already liable on the instrument
c. The acceptance for honor must be in writing and signed by the acceptor for honor
d. The bill must have been previously protested for non-acceptance or for better security
___55. M issued to P, accommodated party, a negotiable promissory note for P10,000. P endorsed it to A, A to B, B to C.
Which of the following is incorrect?
a. M can collect from P, if M will pay C
b. P may directly pay C
c. Between M and P, M is secondarily liable while P is principally liable
d. P can collect from M, if P will pay C
___56. M makes a negotiable promissory note in favor of P payable on December 25,2010 with the following successive
indorsements P to A, A to B, and B to C. On the due date, M is paying C, but C extends the payment up to December
25,2011. Which of the following is incorrect?
a. C may still enforce the instrument against M
b. If M becomes insolvent on December 25,2011, P, A and B are discharged from their obligation.
c. If the indorsers consented to the extension of time and M becoming insolvent on December 25,2011, the I
ndorsers are still liable.
d. If before December 25,2011, C cancels the signature of P as indorser, P, A and B and the instrument are
discharged.
___57. Omissions that do not affect the negotiability of an instrument, except
a. It is not dated.
b. Does not specify the value given
c. Does not specify the place where it is drawn
d. Does not name the payee where the instrument is payable to order
___58. Which of the following instruments is not negotiable for the treason that the instrument is not payable at a
determinable future time?
a. 30 days after demand, drawer A directs drawee B to pay C or order P10,000. Sgd. E.
b. 20 days after the death of R, I promise to pay to the order of B P10,000. Sgd C.
c. 10 days after A passes the CPA board exam, I promise to pay to the order of B P10,000. Sgd. C.
d. On or before February 28,2012, I promise to pay A or order P10,000. Sgd. B.
___59. X obtains the signature of Y for autograph purpose. X writes a negotiable promissory note above Ys signature.
The note was validly negotiated to Z who is a holder in due course. What kind of defense can Y avail against Z?
a. Personal defense
b. Real defense
c. Equitable defense
d. Qualified defense
___60. A issued a promissory note to the order of B for P10,000 payable on September 30,2010 in payment of a TV set
sold by B to A. B failed to deliver the TV set to A and instead transferred the note to C for value but without indorsement.
Which of the following is correct?
a. C is deemed a holder for value when B transferred the note to him
b. C becomes a holder in due course when B indorsed the note to C on October 9,2010
c. C has no right to compel B to make the proper indorsement to him
d. C cannot collect from A because As defense of lack of consideration
___61. M issues a promissory note payable to P or bearer. If P indorses the note to A, which of the following is correct?
a. A must also indorse to negotiate the note
b. If A merely negotiates by delivery to B, P is liable to B because of his indorsement to A
c. If A merely negotiates by delivery to B, B becomes a holder even if P indorsed it to A
d. The instrument is converted to an order instrument
___62. Which of the following statements is not correct?
a. Where the instrument is payable on demand and it is negotiated after an unreasonable length of time after its
issue, the holder is not a deemed a holder in due course
b. A holder in due course is a holder for value
c. A holder for value may not be a holder in due course
d. An accommodation party is liable to holder for value only is such holder at the time of taking the instrument is
not aware that he is only an accommodation party
___63. Negotiation as distinguished from assignment
a. Refers generally to an ordinary contract
c. Transferee is a holder
b. Does not warrant the solvency of the prior parties
d. Subject to both real and personal defenses
___64. A issued a negotiable promissory note to the order of B for P10,000 payable in 30 days after date. Later B
endorsed the note to C. Then X stole the note from C, forged the signature of C and negotiated it to D, and D to E, E to F,
the holder. On maturity of the note, which of the following statements is not correct?
a. F can collect from either D or E because their signatures are genuine and the note is operative against them
b. F can collect A because A cannot put up forgery as his defense as his signature is genuine
c. F cannot collect from C because it was Cs signature which was forged
d. F cannot collect from B because B is a party prior to the forgery
___76. A issued a promissory note payable to B or order for P10,000 for 10 bottles of whisky sold by B to A. Later B
negotiated the note to C. Subsequently, A discovered that only 5 bottles of whisky are genuine. As a result
a. C can enforce the note against A for P10,000 regardless of whether C is holder in due course or not
b. C cannot enforce the note against A for P10,000 even if he is a holder in due course
c. C can enforce the note against A only for P5,000 regardless of whether is a holder in due course or not
d. C can enforce the note against A only for P5,000 if he is not a holder in due course
___77. A makes a negotiable note to bearer and delivers it to B for safekeeping. The note is negotiated by B to C. Can A
refuse to pay C on the ground that the note was originally delivered to B for a special purpose only?
a. Yes , A can prove that he delivered the instrument to B only for a special purpose
b. No where the instrument is in the hands of any holder, a valid delivery thereof by all parties prior to him so as to
make them liable to him is conclusively presumed
c. Yes because B negotiated the note without authority
d. No if C is a holder in due course
___78. A made a negotiable promissory note in favor of B or order who negotiated it to C under the following
indorsements. Pay to C after passing the CPA examination in October 2011. C presented it to A for payment and it was
duly paid, D did not pass the CPA examination. Which of the following is correct?
a. The promissory note is not negotiable because of the condition imposed
b. The promissory note becomes void because the condition was not satisfied
c. A had no right to pay C and therefore can be compelled to pay again
d. A may disregard the condition and make payment whether the condition is fulfilled or not
___79. When the instrument is complete and undelivered, delivery is presumed to have been made in favor of the holder,
the presumption is
a. Conclusive whether holder in due course or for value
b. Prima-facie whether holder in due course or for value
c. Conclusive if holder for value and prima facie of holder in due course
d. Prima-facie if holder for value and conclusive if holder in due course
___80. The following are functions of a negotiable instrument, except
a. It increases credit circulation
c. As legal tender
b. As substitute for money
d. In increases purchasing power in circulation
___81. Which of the following does not discharge a negotiable instrument?
a. Intentional cancellation of the instrument by the holder
b. Payment by the party primarily liable to holder or his authorized representative
c. Payment by maker of a promissory note before maturity date
d. Voluntary surrender of the instrument by the holder to the maker without collecting
___82. A bill of exchange to which document is attached when presentment for payment or acceptance is made
a. Trade acceptance
b. Bank acceptance
c. Clean bill of exchange
d. Documentary bill of exchange
___83. A transfer of negotiable instrument where the holder of the instrument dies and his title thereto is transferred to his
heirs or personal representative is
a. By assignment
b. By negotiation
c. By operation of law
d. By accommodation
___84. The effect of a forged signature or one made without authority of the person whose signature it purports to be,
except
a. The instrument is wholly inoperative
b. No right tor retain the instrument
c. No right to give a discharge therefore
d. No right to enforce payment through or under such signature can be required
___85. The writing of the name of indorser on the instrument itself or upon a paper attached thereto in evidence of his
transaction of the title to it, or of his assuring its payment or both.
a. Allonge
b. Forgery
c. Signature by procuration
d. Indorsement
___86. Indorsement made by a person not otherwise a party to the instrument, who places therein his signature in blank
before delivery.
a. Blank
b. Special
c. Facultative
d. Irregular
___87. Indorsement where the indorser enlarges his liability by waiving the usual demand and notice of dishonor.
a. Qualified
b. Facultative
c. Restrictive
d. Conditional
___88. Which of the following is a restrictive endorsement, pay to J?
a. In trust for E, Sgd. M.
c. At his own risk. Sgd. E
b. If he passes the CPA examination, Sgd. E.
d. Notice of dishonor waived. Sgd. E