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NEGOTIABLE INSTRUMENTS LAW

Part I

Preliminaries

1. Memorize Section 1 of the Negotiable Instruments Law


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2. Define a negotiable instrument according to the Supreme Court of the Philippines.


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3. What is/are the function/s of negotiable instruments?


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4. What are the common forms of negotiable instruments?


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5. What is the important characteristic or feature of negotiable instruments?


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6. Define a negotiable promissory note.


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7. Define a negotiable bill of exchange.


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8. Define a negotiable check.


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Lesson 1 – Promissory Notes

9. Define a negotiable promissory note.


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10. What are the special types of promissory notes?
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11. Define a Certificate of Deposit.


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12. What is a Bond?


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13. Define a Bank Note.


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14. What is a Due Bill?


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Lesson 2- Bill of Exchange

15. Define a negotiable Bill of Exchange.


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16. Give the special types of bills of exchange.


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17. Define a trade acceptance bill.


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18. Define a banker’s acceptance bill.


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19. Is a treasury warrant negotiable?


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20. Are postal money orders negotiable?


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21. Define a clean bill of exchange.
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22. What is a documentary bill?


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23. Can a payee enforce payment on the bill against the drawee to whom the bill is
addressed, if the drawee does not accept the bill?
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24. May the bill of exchange be addressed to two or more drawees?


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25. Define an inland bill of exchange.


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26. Define a foreign bill of exchange.


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27. Under what circumstances may a bill be considered a promissory note?


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28. Who is a “Referee in case of Need”?


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29. Is the holder duty bound to resort to the referee in case of need?
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Lesson 3 – Check

30. Define a negotiable check.


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31. Name the special types of checks.

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32. Define a cashier’s check.


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33. Define a manager’s check.


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34. Can both cashier’s and manager’s checks be treated as promissory notes?
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35. Define a Memorandum check.


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36. Define a crossed check.


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37. What is the purpose of crossing a check?


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38. Who crosses a check?


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39. In how many ways may a check be crossed?


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40. When is a check said to be crossed specially?


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41. When is a check said to be crossed generally?


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42. What is a traveler’s check?


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43. What is a certified check?
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44. What is the effect of certification of a check?


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45. Who may procure a check to be certified?


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46. What is the effect if the check is certified procured by the holder?
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47. What is the effect of certification of the check procured by the drawer?
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48. When does a check operate as an assignment of the funds of the drawer with the
drawee bank available for payment?
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49. Within what time shall a check be presented for payment?


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50. How do you call a check which is not presented for payment within a reasonable
time after its issue?
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51. When is a drawer of a check discharged from liability in the event it has become
stale?
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52. What is the effect upon the liability of the endorser in case the check is not
presented for payment within a reasonable time after its issuance?
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Lesson 4 – Requisites of Negotiability

53. What are the essential requisites of a negotiable instrument?


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54. What are the essential requisites of a negotiable promissory note?


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55. What are the essential requisites of a negotiable bill of exchange?


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56. What are the essential requisites of a negotiable check?


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Lesson 5 – Writing

57. What constitutes in writing?


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58. What is the doctrine of substantial compliance?


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59. For an instrument to be negotiable must it follow literally the language of the
Negotiable Instruments Law?
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60. What is the difference between written and printed?


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Lesson 6 – Signature

61. What are the rules regarding signature?


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62. What is the general rule as to the liability of a person whose signature does not
appear on the instrument?
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63. What are the exceptions to this general rule?


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64. What are requisites must be followed so that the agent in so signing his principal
will not be personally liable?
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65. Suppose an agent signs as follows: (Sgd.) Juan de la Cruz


agent of Pedro Reyes:
Under such signature who shall be liable?
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66. What is meant by “disclosure of the principal”?


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67. Must disclosure of the principal be made always on the signature?


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68. What is a signature per procuration?


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69. How is a signature per procuration made?


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70. What is the effect of a signature per procuration?


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71. The question in this item was moved to Part 3 of GQ as question item 19

72. Define forgery.


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73. In how many ways may forgery of a signature be done?
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74. What are the other forms of forgery?


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75. Explain Fraud in Factum.


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76. How is duress amounting to forgery done?


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77. Supposing A represents himself to be Jose Reyes, when in fact he is not. Through
this misinterpretation A obtains from X a negotiable note payable to order of Jose Reyes.
Then A indorses the note, signing “JOSE REYES”. Is this forgery?
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78. What are the effects of forgery of a signature on the instrument in general?
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79. Who are the persons precluded from setting up the defense of forgery?
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80. If a broker or agent negotiates an instrument by delivery who shall be liable? Is it


the agent or the principal?
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Lesson 7- Parties

81. Who is a payee? Holder? Bearer?


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82. Who is a maker?


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83. Who is a Drawer?
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84. Who is a drawee?


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85. What is a bank?


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86. Who is an acceptor?


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87. Who is an accommodation party?


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88. Who is an accommodated party?


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89. How many kinds of accommodation parties are there?


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90. Must an accommodation party not receive any consideration at all?


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91. What is the legal position of an accommodated party?


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92. Is the accommodation party liable to the accommodated party?


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93. To whom, then shall an accommodation party be liable on the instrument?


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Lesson 7A – Liabilities of Parties

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94. What kind of liability has a maker?
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95. What are the warranties of a maker?


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96. What kind of liability has the drawer?


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97. What warranties does drawer make?


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98. What kind of liability has the drawee?


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99. As Acceptor, what kind of liability does he have?


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100. What warranties does an acceptor make?


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101. In what respect does a maker differ from the acceptor as regards their primary
liability?
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Lesson 8 – Unconditional Promise or Order

102. When is a promise or order considered unconditional within the meaning of the
Act?
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103. In the following instrument, is the promise unconditional?


“I promise to pay to the order of B P1,000 out of the proceeds of the sale of my
car. (Sgd.) “A”
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104. Suppose the fund stated on the instrument is the source of reimbursement, will the
promise or order remain unconditional?
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105. Is the following instrument negotiable?


Pay to the order of B, P5,000 on Dec. 1, 1987 and reimburse yourself out of my deposit
with you. To: X (Sgd.) “A”
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106. Will an indication of a particular account to be debited with the amount affect
negotiability?
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107. Is the following instrument negotiable?:


“I promise to pay to the order of B, P5,000 in payment of the car I purchased from B.
(Sgd.) “A”
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108. If on the face of the instrument there are additional provisions as something to be
done or added, will the instrument be negotiable?
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109. What is the test to determine whether additional acts will or will not impair
negotiability?
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110. What acts in addition to payment of money will not affect negotiability?
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111. Is the following instrument negotiable?


“I promise to pay to the order of B, P1,000 on Dec. 1, 1987. In case of default I hereby
authorize the sale of my law books I pledge as a security. (Sgd.) “A”
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112. What is meant by “confession of judgment”?


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113. If an instrument contains a confession of judgment, will the instrument remain


negotiable?
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114. In case there is an option to require something to be done in lieu of money on the
instrument, will it affect negotiability?
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Lesson 9 – Sum Certain in Money

115. What constitutes sum certain in money?


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116. If the instrument contains the following:


“To pay P1,000 and all other sums due”, is the sum certain in money?
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117. What is meant by the phrase “stated installments”?


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118. If the instrument contains the following: that the sum of P1,000 is payable in two
equal installments”, will that satisfy the stated installments as required by the law?
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119. Suppose the phrase is the following:


“The sum of P1,000 payable in two equal monthly installments to start on August 1,
1987,” is the sum certain in money?
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120. How does an acceleration clause affect the certainty of the sum payable?
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121. What is meant by “exchange”?


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122. Does the phrase “with exchange” destroy negotiability?
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123. Suppose the instrument is payable in foreign currency, will that destroy
negotiability?
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124. How does the stipulation on costs and attorney’s fees affect negotiability?
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Lesson 10 – Demand

125. When is an instrument considered payable on demand?


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Jan. 10, 1987


126. I promise to pay to the order of B, P1,000 on Jan. 15, 1987.
(Sgd.) A
This note thogh made by A last Jan. 1, 2010 was issued by A to B only last Jan. 18,
2010. when is this note payable?
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127. But if the note above was issued by A to B last Jan. 10, 2010 but was only
indorsed by B to C last Jan. 20 2010, when is it payale?
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Lesson 11 – Fixed Date

128. What are the rules regarding fixed date?


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Lesson 12 – Determinable Future Time

129. When is an instrument said to be payable at a determinable future time?


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130. To what does the phrase “after date” refer?


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131. To what does the phrase “after sight” refer?


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132. Can a promissory note be made payable either at a fixed period after date or after
sight?
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133. Can a bill of exchange be drawn payable at a fixed period after date or sight?
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134. If a bill of exchange payable “10 days after sight” has been presented for
acceptance on Aug. 1, 1987 but at the same time it was refuse acceptance by the drawee,
when shall maturity date be?
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135. If an instrument is payable on or before Dec. 1, 1987, can the maker be compelled
to pay before Dec. 1, 1987?
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136. Where the determinable future time specified on the instrument is sure to happen
or is certain when it shall happen, can the instrument be payable at a fixed period before
such event?
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137. Suppose the event mentioned is “death of a person”, can the instrument be made
payable before such event?
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138. I promise to pay to the order of B when X gets married to Y, Is the instrument
payable on a determinable future time?
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Lesson 13 – Order

139. In how many ways may an instrument be made payable to order?


140. To whose order may an instrument be drawn?
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141. I promise to pay to the order of the Treasurer P1,000 on demand.


Is the above instrument payable to order?
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142. Must the payee to whose order the instrument is payable be always named?
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143. There is no question in this item as well as in item 144 in the given GQ
144.

145. Can you consider the note complete, if it is payable to the order of the maker
himself?
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Lesson 14 – Bearer

146. When is an instrument payable to bearer?


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147. Does the Negotiable Instrument Law distinguish between fictitious person and a
non-existing person?
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148. What requisites must be present so that an instrument where the payee named
therein is fictitious or non-existing be considered payable to bearer?
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149. I promise to pay to Santa Claus P5,000 on demand.


(Sgd.) “A”
Here A knows that his payee is non-existing, is the instrument payable to bearer?
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150. If an instrument payable to order has been indorsed in blank, can it be


subsequently negotiated by mere delivery?
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Lesson 15 – Rules on Construction

151. State the rules of construction where the instrument is ambiguous.


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152. When are the above rules applicable?


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Lesson 16 – Rules Regarding Date

153. What are the rules regarding date?


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154. Is date of issuance essential for negotiability?


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155. When is an instrument considered ante-dated?


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156. When is the instrument considered post-dated?


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157. Does ante-dating or post-dating an instrument invalidate the instrument?


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158. As of what date shall a person acquire title to an instrument which is ante-dated or
post-dated but not for an illegal or fraudulent purpose?
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159. Under what instances may date of issuance or acceptance be inserted in the
instrument?
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160. What is the authority of the holder as regards the insertion of the date?
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161. Will insertion of a wrong date invalidate the instrument?


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Lesson 17 – Omissions not Affecting Negotiability

162. What factors may be omitted on the face of the instrument, yet will not impair
negotiability?
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