UNIVERSITY OF BOHOL

City of Tagbilaran

COLLEGE OF BUSINESS AND ACCOUNTANCY

NEGOTIABLE INSTRUMENTS LAW

SEMI-FINAL EXAM

Instructions: Write TRUE if the statement is correct and FALSE if the

statement is incorrect. Erasures are not allowed. Any form of erasures made
in this questionnaire will not be tolerated and will be given zero credit.

_____1. An instrument which contains a promise or order to pay a sum

of money which is subject to a condition is negotiable as long as the condition
happens.
_____2. An instrument where no time for payment is expressed is payable
on demand.
_____3. An instrument payable to a specified person or his agent is
payable to order.
_____4. The negotiable character of an instrument is not affected by the
fact that it is not dated.
_____5. A bill of exchange which is addressed to two or more drawees
alternatively does not affect the negotiable character of an instrument.
_____6. Where the name of the payee does not purport to be the name of
any person, the instrument is payable to bearer.
_____7. Where an instrument is payable to the order of a “fictitious
person”, the instrument is still payable to bearer although such person is
actually existing as long as he was not the intended recipient of payment.
_____8. A bearer negotiable instrument is converted into an order
negotiable instrument if it is specially indorsed.
_____9. An order instrument becomes a bearer instrument if one several
indorsements is an indorsement in blank.
_____10. The ante-dating or post-dating of an instrument does not render
it invalid provided it is not done for an illegal purpose.
_____11. An instrument that it is incomplete but delivered, when
completed without authority, shall be considered to have been completed
with authority in the hands of a holder in due course.
_____12. An instrument that is complete but is undelivered shall be
considered validly delivered if it is in the hands of a holder in due course.
_____13. If the amount due on an instrument is payable in installments,
the amount and maturity of each installment must be stated so that the
negotiable character of the instrument will not be affected.
_____14. When there is a conflict between the written and printed
provisions of an instrument, the printed provisions will prevail.
_____15. When an instrument provides for the payment of interest
without specifying the date from which the interest is to run, the interest runs
from the date of the instrument.
_____16. When an instrument is not dated, it will be dated as of the time
it was issued.
_____17. When an instrument containing the words “I promise to pay” is
signed by two or more persons, they are deemed to be jointly and severally
liable.
_____18. When a signature is so placed upon the instrument that it is not
clear in what capacity the person making it intended to sign, he is deemed to
be an indorser.
_____19. When an indorsement is forged in a promissory note payable to
bearer, the party whose indorsement was forged and all parties prior to him
may raise the defense of forgery against any holder.
_____20. A pre-existing debt constitutes value and may be the
consideration of an instrument.
_____21. Want or absence of consideration is a defense against a holder in
due course.
_____22. A negotiable instrument may not be transferred by assignment.
_____23. A person signing an instrument as an agent is not liable thereon
provided he is duly authorized, discloses his principal, and indicates that he
is signing as an agent.
_____24. An indorsement made by a minor passes title to the instrument
although he himself does not incur any liability on the instrument.
_____25. An indorsement may be written on a separate sheet which is
attached to the instrument.
_____26. As a rule, an indorsement must be of the whole amount of the
instrument.
_____27. An indorsement to two or more indorsees severally such as “Pay
to A, 10,000.00 and to B, 5,000.00” is a valid indorsement of the instrument.
_____28. An indorsement that prohibits the further negotiation of the
instrument renders the instrument non-negotiable.
_____29. If an indorsement is conditional, the party required to pay the
instrument may disregard the condition and make payment but the indorsee
must hold the proceeds subject to the rights of the person indorsing
conditionally.
_____30. If an instrument is indorsed to two or more persons jointly, all of
them must indorse unless one is authorized to indorse for the others.
_____31. An instrument negotiable in origin continues to be negotiable
until it is restrictively indorsed or discharged by payment or otherwise.
_____32. When an instrument is negotiated to a prior party, the prior party
can go after the intervening parties for the amount of the instrument.
_____33. A holder may still be a holder in due course even if the instrument
is not dated.
_____34. If an instrument stamped with the words “no sufficient funds” is
negotiated, the holder will no longer be considered a holder in due course.
_____35. A personal defense is available only against a holder not in due
course.
_____36. Every holder is presumed to be a holder in due course.
_____37. A holder can still collect on the instrument even if he is not a
holder in due course and he himself is not a party to any fraud or illegality
affecting the instrument.
_____38. If a holder has received notice of any defect or infirmity of the
instrument before he has paid the full amount agreed to be paid therefor, he
will be deemed a holder in due course only to the extent of the amount paid
by him.
_____39. When a negotiable instrument is delivered without any
indorsement, the negotiation takes effect at the time of its first delivery if it
is subsequently indorsed.
_____40. When an instrument originally payable to bearer is specially
indorsed, the person indorsing specially is liable only to such holders as make
title through his indorsement.
_____41. Indorsers are liable prima facie in the order in which they
indorse.
_____42. Joint payees or joint indorsees are deemed to indorse jointly and
severally.
_____43. Payment in good faith before maturity which is made by the
principal debtor to the holder and without notice that his title is defective
discharges the instrument.
_____44. The cancellation of a negotiable instrument which is made by the
holder is presumed to have been made intentionally.
_____45. When the principal debtor becomes the holder in his own right
before maturity, the instrument is discharged by confusion or merger.
_____46. An absolute and unconditional renunciation made by the holder
before, at or after maturity in favor of the principal debtor discharges the
instrument.
_____47. A bill of exchange does not operate as an assignment of funds in
the hands of the drawee and the drawee is not liable until he accepts the
same.
_____48. The certification of a check by a bank is equivalent to acceptance,
and when procured by the holder, the drawer and the indorsers are
discharged.
_____49. A check is always payable on demand.
_____50. The drawer of a bill of exchange need not have funds with the
drawee except in the case of a check.

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