Forms of negotiable instrument

CERTAINTY AS TO SUM WHEN PROMISE IS UNCONDITIONAL

INTEREST
An unqualified order or promise to pay
 DOES NOT RENDER THE INSTRUMENT is unconditional though coupled with
NON-NEGOTIABLE
 MUST BE EASILY COMPUTED  Indication of a particular fund out of
 MUST BE EASILY COMPUTED which reimbursement is to be made
 NO DATE FROM WHICH THE INTEREST  Indication of a particular account to be
IS TO RUN: debited with the amount
-DATE OF INSTRUMENT  Statement of transaction which gives
-DATE OF ISSUE rise to the instrument
 INTEREST RATE NOT SPECIFIED:
-LEGAL RATE OF 6% Indication of a particular fund out of
which reimbursement is to be made
ACCELERATION CLAUSE
 DEPENDENT ON MAKER –UPON  Negotiable
DEFAULT IN PAYMENT, THE WHOLE  Fund indicated is not the direct source
SHALL BECOME DUE of payment
 AT OPTION OF HOLDER  Fund indicated is only the source of
– NON NEGOTIABLE reimbursement which is a subsequent
act to the payment
INSTALLMENT
 INTEREST OF EACH INSTALLMENT TEST IN DETERMINING
 DUE DATE OF EACH INSTALLMENT NEGOTIABILITY
MUST BE FIXED IN THE INSTRUMENT
 The drawee pays out of his own funds
WITH EXCHANGE  The drawee reimburses the payment
 APPLIES TO INSTRUMENTS DRAWN IN from the particular account indicated or
ONE COUNTRY AND PAYABLE TO debits the stated account
ANOTHER (FOREIGN BILLS)
 MAY BE AT FIXED OR CURRENT RATE • If the payment is to be made out of a
particular account or fund, the
WITH COSTS OF COLLECTION OR AN instrument is non negotiable
ATTORNEY’S FEE • The payment must not depend upon
 EFFECTIVE AFTER MATURITY. WHEN the existence or adequacy of the
THE INSTRUMENT CEASES TO BE particular account to be debited
NEGOTIABLE
 ATTORNEY’S FEE:
DETERMINABLE FUTURE TIME
UNCONSCIONABLE OR UNREASONABLE
– MAY BE REDUCED BY THE COURTS PAYABLE AT A DETERMINABLE FUTURE
NOT SPECIFIED – SHALL BE IN TIME
REASONABLE SUM
 At a fixed period after date or
sight

,  On or before a fixed or No specified place
determinable future time
Presumed to be payable at the place or
specified therein
residence of the maker or drawer
 On or at a fixed period after the
occurrence of a specified event Bear’s Seal
which is certain to happen,
though the time of happening is Does not destroy an instrument’s negotiability.
uncertain Designates a particular kind of money

 An instrument is non negotiable Can be any kind of current or foreign money
if it is payable upon contingency that has a fixed value in relation to our money
 The happening of an event does WHEN PAYABLE ON DEMAND
not cure the defect
EXPRESSED TO BE PAYABLE:
ADDITIONAL PROVISIONS NOT
• ON DEMAND
AFFECTING NEGOTIABILITY
• AT SIGHT
GENERAL RULE
• ON PRESENTATION
 An instrument which contains
an order or promise to do any NO TIME FOR PAYMENT IS EXPRESSED
act in addition to the payment
INSTRUMENT ISSUED, ACCEPTED, OR
of money is non-negotiable.
INDORSED WHEN OVERDUE
OMISSIONS; SEAL; PARTICULAR
WHEN PAYABLE TO ORDER
MONEY
pay to the order of
The validity and negotiable
character of an instrument are  Two or more payees jointly
not affected by the fact that --  One or more several payees
 The holder of an office for the time
It is not dated
being
MATURITY:  A specified person or to him or his order
 A payee who is not a maker, drawer, or
 Date of instrument
drawee
 Date of issue
 Drawer or maker
WHEN INTEREST IS TO RUN:  Drawee

 Date of instrument WHEN PAYABLE TO BEARER
 Date of issue
 When it is expressed to be so payable;
No specified value given or
 When it is payable to a person named
Every negotiable instrument is presumed to be
therein or bearer; or
issued for a valuable consideration
 When it is payable to the order of a
fictitious or non-existing person, and