Professional Documents
Culture Documents
CERTAINTY AS TO SUM
The principal amount to be paid by the maker or the drawee is unaffected. There is
an absolute obligation to pay a certain sum in money although certain amounts may
be added, as in the case where interest or attorney’s fees will be paid.
The promise to do an act or to pay another item in addition to the payment of money
that will render the note not negotiable must be a promised that conflicts with some or
one of the essential characteristics of a negotiable instrument
STATED INSTALLMENTS
Means that the dates of each installment must be fixed or at least determinable as well
as the amount to be paid for each installment
There is NO certainty / Negotiability SHALL BE AFFECTED, if the instrument merely
states that the total amount shall be paid in 5 installments without stating when each
installment should be aid
ACCELERATION CLAUSES
“Upon default in the payment of any installment or of interest, the whole shall become
due.”
The non-payment of any installment or of interest is the circumstance that triggers the
acceleration of the maturity date of the entire balance. The act or omission of the maker
makes the acceleration clause operate – non-payment of any installment
When a promise or order to pay is unconditional, it means that it must not be subject
to any condition or contingency. It must be payable absolutely.
CONDITION – is a future and uncertain event, or a past event unknown to the parties, the
happening or non-happening which may either give rise to an obligation or may extinguish existing
ones.
Suspensive Condition – if the happening or non-happening of the event will give rise to an
obligation
Resolutory Condition – if the happening or non-happening of the event will extinguish existing
obligation
A statement of transaction that gave rise to the obligation covered by the note or the bill
does not destroy the negotiability of the instrument. However, reference to another
transaction must be descriptive rather than restrictive
The instrument must only give information that it was issues in connection with a particular
transaction or document. It must not make the order or promise dependent or burdened
by another transaction.
It shall enhance the ability of the instrument to circulate freely from one person to another,
as no one would accept a paper for debt if the right to recover were not absolute.
If there is condition, it will constitute a simple contract rather than a negotiable paper
If the DUTY TO PAY IS NOT AFFECTED BY SUCH TERMS, then the promise or order is
UNCONDITIONAL
PAYABLE TO BEARER
An instrument to be negotiable, must be payable to order or to bearer and NOT TO A
SPECIFIC PERSON OR ENTITY, as required by NIL
Any act in addition to the payment of money makes the instrument non-negotiable
Negotiable character of an instrument is not affected by a provision which
1. Authorize the sale of collateral securities in case the instrument be not paid at
maturity
2. Authorizes a confession of judgment if the instrument be not paid at maturity; or
3. Waives the benefit of any law intended for the advantage or protection of the obligor;
or
4. Gives the holder an election to require something to be done in lieu of payment of
money
5. But nothing in this sections shall validate any provision or stipulation otherwise illegal
OMISSIONS THAT DO NOT AFFECT NEGOTIABILITY
1. It is not dated
Exception: said date is tied to the date of issue (eg payable 30 days after date)
Or Where interest is stipulated for the purpose of determining when the interest is to run
In the case of promissory note, that date of issue and in the case of the bill of exchange,
the date of the last negotiation thereof, for the purpose of determining whether a party
acted within a reasonable time in making presentment for payment
2. Does not specify the value given or that any value has been given therefor
3. Does not specify the place where it is drawn or the place where it is payable
4. Bears a seal
1. DISCREPANCY ON THE SUM PAYABLE (In Words and Figures) The sum in words is
the one payable unless words is ambiguous or uncertain, then it is the figures
2. PAYMENT OF INTEREST but not specifying date from which interest is to run,
INTEREST RUNS FROM THE DATE OF THE INSTRUMENT; if UNDATED, FROM THE
ISSUE THEREOF
3. INSTRUMENT NOT DATED, it will be considered to be dated as of the time it was
issued
4. CONFLICT BETWEEN THE WRITTEN AND PRINTED PROVISIONS, the WRITTEN
provision prevails
5. INSTRUMENT IS AMBIGUOUS that there is a doubt whether it Is a bill or note, the
holder may treat is as either at his election
6. SIGNATURE NOT CLEAR IN WHAT CAPACITY THE PERSON MAKING THE SAME
INTENDED TO SIGNED, he is deemed INDORSER
7. INSTRUMENT containing the word I promise to pay is signed by two or more persons,
DEEMED JOINTLY or severally liable thereon
SIGNATURE – a person whose signature DOES NOT appear on the instrument is NOT
LIABLE EXCEPT: