Name____________________________ Score ___________________

Negotiable Instruments Law Quiz

1. Pay to the order of B, P25,000, at sight after the arrival and discharge of 10 boxes of
sardines from Vessel X at Pier 8, Manila.

To: PNB Sgd. A

Statement No. 1. The instrument is negotiable because it is payable on demand.

Statement No. 2. The instrument is not negotiable because the order is conditional.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

2. I promise to pay to the order of B, P8,000 one year after date in 5 month’s installments of
P1,600 each, “with the privilege of discharging this note by payment of principal less a
discount of 5% within 30 days from the date thereof.”
Sgd. X

Statement 1. The note is negotiable because although it is not dated, one year from date
will be one year from issuance thereof.
Statement 2. The instrument is not negotiable because the sum is not certain.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

1. I promise to pay to the order of B, U.S.$1,000 in current money at Manila Philippines,

on December 10, 2009.

Statement 1. This note is negotiable because the sum is certain.

Statement 2. This note is not negotiable because it does not state a particular kind of
current money.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

4. I promise to pay to the order of B, P20,000 at such time as the promissor may
choose.
Sgd. X
Statement 1. The instrument is negotiable because it is payable on demand.
Statement 2. The instrument is payable on a determinate future time.
A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

5. I promise to pay to the order of B, P20,000 on _________.

Sgd. X

Statement 1. The instrument is incomplete, hence not negotiable.

Statement 2. The instrument is complete and considered payable on demand.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

6. Pay to the order of B, P20,000 on December 1, 2009.

Accepted:

Sgd. X Sgd. Y

Statement 1. The bill is negotiable but ambiguous.

Statement 2. The bill is not negotiable and at the same time ambiguous.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

6. I promise to pay to bearer or order P20,000 on demand.

Sgd. A

Statement 1. This is payable to bearer.

Statement 2. This note is negotiable because although it is payable to order, the payee is not
specified with reasonable certainty.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

7. A negotiable note is signed in this manner:

Sgd. X, agent of Y

Statement 1. It is X who is liable because there was no disclosure of the principal.

Statement 2. It is Y who is liable because the words “agent of Y” is sufficient disclosure.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

8. I promise to pay Batman P20,000 on demand.

Sgd. A

Statement 1. This is negotiable provided A knows Batman is a non-existing person at the

time he made the note.
Statement 2. This is a negotiable note payable to bearer.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

9. Pay to the order of B, P20,000 on demand.

To: SantaClaus Sgd. A

Statement 1. The bill is not negotiable because the drawee is fictitious.

Statement 2. The bill is still negotiable and can be treated as a promissory note.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

10. I promise to pay to the order of B, P20,000 on December 1, 2009 with costs and
attorney’s fees incurred for the collection of the debt.
Sgd. A

Statement 1. The instrument is negotiable because the sum certain is ascertainable on the face
of
the instrument.

Statement 2. The instrument is not negotiable because the sum is not certain.

A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

11. Due to Maria Santos P5,000 on December 1, 2009.

Sgd. A

Statement 1. This is a negotiable bill of exchange because it does not contain a promise to
pay.

Statement 2. This is nevertheless a promissory note but it is not negotiable because it is

payable to order.
A. True; False
B. False; True
C. Both statements are true.
D. Both statements are false

By Diaz

1. Which of the following is not requisite to consider a person an accommodation party?

A. He must not be liable to a holder in due course.

B. He must be a party to the instrument signing as a maker, drawer, acceptor or indorser.
C. He must not receive value therefore.
D. He must sign for the purpose of lending his name or credit.

2.The following exceptions are the rights of a holder in due course. Which is the exception?

A. He may enforce payment of the instrument for the full amount thereof against all
parties
liable thereon.
B. He ma receive payment and if payment is in due course, the instrument is discharged.
C. He holds the instrument subject to the same defense as if it were non-negotiable.
D. He may sue on the instrument in his own name.

3.An indorser of a note or a bill is:

A. Secondarily liable C. Primarily liable

B. Tertiary liable D. Not liable

4.This is not negotiation of a negotiable instrument:

A. Assignment
B. Delivery of a hearer instrument
C. Endorsement completed by delivery of an instrument payable to order
D. Delivery of an instrument to the payee.

5. A check drawn by the bank upon itself and payable to a third person.

A. Certified check C. Traveler’s check

B. Cashier’s check D. Manager’s check

6. A issues a bill payable to the order of B. Later B without endorsing the bill transfers for a
consideration said bill to C. The following except one, are the valid effects of the transfer:

A. C acquires the right to have the endorsement of B

B. The bill is merely assigned and not negotiated
C. C becomes a holder
D. The transfer vests in C such title as B had thereon.
7. The following are instances when a bank may refuse to pay checks drawn against it, except
one:

A. If there is a “stop payment” issued by the drawer

B. When the bank receive notice of the drawer’s death
C. If the drawer’s deposit is sufficient
D. If the drawer is insolvent

8. A issues a bill payable to the order of B. Later B without endorsing the bill transfers for a
consideration said bill to C. The following except one, are the valid effects of the transfer:

A. C acquires the right to have the endorsement of B.

B. The bill is merely assigned and not negotiated.
C. C becomes the holder
D. The transfer vests in C such title as B had thereon.

9. A issued a promissory note to the order of B for P10,000 payable after 30 days after date.
Later B endorses it 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, the holder. On maturity of the note, which of the
following statements is not correct and invalid?

A. F can collect from either D or E, because the signature are genuine and the note is
operative against them.
B. F can collect from A because A cannot put up forgery as his defense.
C. F cannot collect from C it was C’s signature which was forged
D. F cannot collect from B because B is a party prior to the forgery

10. An instrument is indorsed as follows: “Pay to A, for B” (Sgd) C. Then A indorsed the
instrument “Pay to D” (Sgd) A, in payment of A’s personal loan to D, the instrument was
accepted by D as indorsed by A. Is D acting in good faith when he accepted the instrument as
indorsed?

A. Yes, because D is a holder in due course

B. No, because D knew by prior endorsement that A is merely a trustee for B and
has
no right to negotiate the instrument
C. Yes, because D acquired the instrument for value
D. No, because D did not get the consent of B