Beruflich Dokumente
Kultur Dokumente
(NARRATIVE REPORT)
SUBMITTED TO:
ATTY. MYKEDOX KNOEL CUCHAPIN
SUBMITTED BY:
MICHAELA EVAN R. DOMINGO
NEGOTIABLE INSTRUMENTS
ENFORCEMENT OF LIABILITY
A. Promissory Notes
B. Bills of Exchange
III. If accepted
Liabilities refers to the obligation of a party to a negotiable instrument to pay the same
according to its terms.
The parties to a negotiable instrument may be classified according to their liability as
follows:
(1) Primarily Liable
The maker of a promissory note
The acceptor of a bill of exchange
The certifier of a check
(2) Secondarily Liable
The drawer of a bill
The indorser of a note or a bill
(3) Not liable:
The drawee until he accepts the instruments in which case he becomes an
acceptor
A person becomes a party to an instrument by signing his name thereon. The general
rule is that no person is liable on an instrument unless his signature appears thereon.
Primary party and secondary party distinguished
The person primarily liable on the instrument is the person who, by the
terms of the instrument is absolutely required to pay the same.
The principal distinction between a primarily liable and a secondarily liable
party is that, while the former is unconditionally bound, the latter is conditionally
bound. Being unconditionally bound, the primary party is absolutely required to
pay the instrument upon its maturity.
On the other hand, the secondary party undertakes to pay the instrument
only after certain conditions have been fulfilled. The liability of all secondary parties
to an instrument ends when the primary party pays the full amount of the
instrument to the proper party.
2. GENERAL STEPS IN ENFORCING LIABILITY
A. PROMISSORY NOTES
The persons secondarily liable, that is, the drawer and the indorsers,
stand on a different footing. Since they undertake to pay only if the
instrument is dishonored, it is obvious that a demand for payment
must first be made upon the person primarily liable and this demand
is affected by presenting the instrument to him for payment
Effect where presentment not made
A. PROMISSORY NOTES
Notice of dishonor is bringing, either verbally or by writing, to the knowledge of the drawer or
indorser of an instrument, the fact that a specified negotiable instrument, upon proper proceedings
taken, has not been accepted or has not been paid and that the party notified is expected to pay
it. (Martin v. Brown)
A negotiable instrument is considered to be dishonored
B. PROMISSORY NOTES
KINDS OF ACCEPTANCE
As to liability, an acceptance may be: general or qualified. Both kinds of acceptance are
defined in sec. 139.
“ACCEPTED” or “GOOD” without anything more except the signature of the acceptor is
a general acceptance as the acceptor binds himself to pay the bill according exactly to its
tenor. The acceptance is still general although it is to pay at a particular place. Thus, for
example, “accepted, payable at the BDO” is a general acceptance. But if it is reads,
“accepted, payable only at the BDO” is a qualified acceptance
Acceptance of a bill is the signification by the drawee of his assent to the order of
the drawer (Sec. 132)
It has also been defined as the act by which the drawee manifests his
consent to comply with the request contained in the bill of exchange directed
to him and it contemplates an engagement or promise to pay.
B. PROMISSORY NOTES
Notice of dishonor is bringing, either verbally or by writing, to the knowledge of the drawer or
indorser of an instrument, the fact that a specified negotiable instrument, upon proper proceedings
taken, has not been accepted or has not been paid and that the party notified is expected to pay
it. (Martin v. Brown)
2. GENERAL STEPS IN ENFORCING LIABILITY
B. PROMISSORY NOTES
III. IF ACCEPTED