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REQUISITES AS TO A NEGOTIABLE NOTE

1. It must be in writing and signed by the maker  
2. It must contain an unconditional promise to pay a sum certain in money
3. It  must  be  payable  on  demand,  or  at  a  fixed  or  determinable future time
4. It must be payable to order or to bearer
 

REQUISITES AS TO A NEGOTIABLE BILL

1. It must be in writing and signed by the maker
2. It  must  contain  an  unconditional  order  to  pay  a  sum  certain  in money
3. It  must  be  payable  on  demand,  or  at  a  fixed  or  determinable future time
4. It must be payable to order or to bearer
5. The  drawee  must  be  named  or  otherwise  indicated  therein  with reasonable certainty

THE INSTRUMENT MUST BE IN WRITING

>      There must be a writing of some kind, for if the instrument were not in writing, there would be nothing to be negotiated or passed from hand to hand
 

THE INSTRUMENT MUST BE SIGNED BY THE MAKER OR DRAWER

>      Full name must be written
>      At  least  the  surname  should  appear  and  generally,  the  signature usually is by writing the signer’s name
>      But, where the name is not signed, the holder must prove that what is written is intended as a signature of the person sought to be charged
>      Commonly,  it  is  found  in  the  lower  part  of  the  instrument.    It  could also be signed anywhere as long as the maker or drawer acknowledges the signature to be his own.
 

IF A BILL, IT MUST CONTAIN AN ORDER TO PAY

•      It is an instrument demanding right
•      Any words which are equivalent to order or which show the drawer’s will  that  the  money  should  be  paid,  are  sufficient  to  make  the instrument a bill of exchange
 

AN INSTRUMENT WITH AN EFFECT OF MERE AUTHORITY TO PAY

>      It is not negotiable because it is not an order to pay
>      “I hereby authorize you to pay P1000 to Pedro Cruz”
 

EFFECT OF MERE REQUEST TO PAY

>      The  instrument  is  not  negotiable  as  it  is  not  an  order  to  pay  but  a mere request to pay
>      “Please to let the bearer have P70 and place to  my account and you will oblige”
 

EFFECT OF MERE WORDS OF CIVILITY

>      The  mere  fact  that  it  contains  words  of  civility  or  courtesy  doesn’t make it non-negotiable
 

WHERE INSTRUMENT IS A NOTE, IT MUST CONTAIN A PROMISE TO PAY

1. It is enough that words of equivalent meaning are used
2. The  promise  is  implied  from  promissory  words  contained  in  the instrument
 

THE PROMISE OR ORDER TO PAY MUST BE UNCONDITIONAL

>      It must not be subject to a condition
>      It must be unconditional and absolute
 

SUM PAYABLE MUST BE DEFINITE AND CERTAIN

>      The amount of money to be paid must be determinable by inspection and must be stated plainly on the face of the instrument, and like the denomination of money, must be started in the body of the instrument
 

SUM MUST BE PAYABLE IN MONEY ONLY

>      Money is the one standard of value in actual business or more stable standard of value
>      Legal tender—that kind of money which the law compels the creditor to accept in payment of his debt when tendered by the debtor in the right amount
>      But  if  authorized  by  law  or  consent  of  creditor,  cash  may  be substituted by other means, or may be check
>      Instrument need not be payable in legal tender
 

INSTRUMENT MUST SPECIFY DENOMINATION

>      Instruments should express the specific denomination of money when  it is payable in the money of a foreign country in order that the courts may  be  able  to  ascertain  its  equivalent  value;  otherwise,  it  is  non-negotiable
 

PAYABLE ON DEMAND OR ON A FIXED OR DETERMINABLE FUTURE TIME

>      On demand
>      At a fixed or determinable future time
 

WHERE NO YEAR IS SPECIFIED

>      Neither payable on demand or on a fixed or determinable future time
>      Time of payment is not determinable as the year is not stated
 

THE INSTRUMENT MUST BE PAYABLE TO ORDER OR TO BEARER

>      An  instrument  is  not  negotiable  unless  made  payable  to  a  person  or his order or bearer or unless words of the similar or equivalent import are used such as assigns or assignees or holder
 

WHERE PAYABLE TO THE ORDER OF BEARER

>      Also negotiable
>      This was held to be payable to order
>      The  payee  of  such  an  instrument  is  the  bearer  and  it  can  only  be negotiated by his indorsement 
 

WHERE PAYABLE TO A CERTAIN PERSON

>      Where the instrument is payable to a specified person, it’s not payable to order
>      Payable to a certain person or his agent 

>      Where payable to “bearer B”
 

THE DRAWEE MUST BE NAMED

>      Requirement that refers only to bills of exchange
>      Drawee’s name may be omitted and be filled in under implied authority like any other blank
>      An acceptance may supply the omission of the designation
 

IMPORTANCE OF FORMALITIES

>      Essential for the security of the mercantile transactions
>      Distinguish   the   negotiable   instrument   from   the   ordinary   non-transferrable written contract
 

NECESSITY OF COMPLIANCE WITH PROVISIONS

>      Where  the  instrument  doesn’t  conform  with  the  requirements  laid down in Section 1, then it is not governed by NIL
 

DETERMINATION OF NEGOTIABILITY

>      By the provisions of the NIL, particularly Section 1 thereof
>      By considering the whole of the instrument
>      By what appears on the face of the instrument and not elsewhere