1nL NLGC1IA8LL INS1kUMLN1S LAW

I ICkM AND IN1LkkL1A1ICN

Sect|on 1 lorm of neqotiob/e instruments An |nstrument to be
negot|ab|e must conform to the fo||ow|ng requ|rements
%a) It must be |n wr|t|ng and s|gned by the maker or drawer

%b) Must conta|n an uncond|t|ona| prom|se or order to pay a sum certa|n |n
money

%c) Must be payab|e on demand or at a f|xed or determ|nab|e future t|me

%d) Must be payab|e to order or to bearer and

%e) Where the |nstrument |s addressed to a drawee he must be named or
otherw|se |nd|cated there|n w|th reasonab|e certa|nty
Sec 2 Jot constitutes certointy os to sum 1he sum payab|e |s a sum
certa|n w|th|n the mean|ng of th|s Act a|though |t |s to be pa|d
%a) w|th |nterest or

%b) by stated |nsta||ments or

%c) by stated |nsta||ments w|th a prov|s|on that upon defau|t |n payment
of any |nsta||ment or of |nterest the who|e sha|| become due or

%d) w|th exchange whether at a f|xed rate or at the current rate or

%e) w|th costs of co||ect|on or an attorneys fee |n case payment sha|| not
be made at matur|ty
Sec 3 Jen promise is unconditiono/ An unqua||f|ed order or prom|se
to pay |s uncond|t|ona| w|th|n the mean|ng of th|s Act though coup|ed
w|th
%a) An |nd|cat|on of a part|cu|ar fund out of wh|ch re|mbursement |s to be
made or a part|cu|ar account to be deb|ted w|th the amount or

%b) A statement of the transact|on wh|ch g|ves r|se to the |nstrument
8ut an order or prom|se to pay out of a part|cu|ar fund |s not
uncond|t|ona|chan rob|es v|rtua| |aw ||brary

Sec 4 ueterminob/e future time wot constitutes An |nstrument |s
payab|e at a determ|nab|e future t|me w|th|n the mean|ng of th|s Act
wh|ch |s expressed to be payab|e
%a) At a f|xed per|od after date or s|ght or

%b) Cn or before a f|xed or determ|nab|e future t|me spec|f|ed there|n or

%c) Cn or at a f|xed per|od after the occurrence of a spec|f|ed event wh|ch
|s certa|n to happen though the t|me of happen|ng be uncerta|n
An |nstrument payab|e upon a cont|ngency |s not negot|ab|e and the
happen|ng of the event does not cure the defect

Sec S 4dditiono/ provisions not offectinq neqotiobi/ity An |nstrument
wh|ch conta|ns an order or prom|se to do any act |n add|t|on to the
payment of money |s not negot|ab|e 8ut the negot|ab|e character of an
|nstrument otherw|se negot|ab|e |s not affected by a prov|s|on wh|ch
%a) author|zes the sa|e of co||atera| secur|t|es |n case the |nstrument be not
pa|d at matur|ty or

%b) author|zes a confess|on of [udgment |f the |nstrument be not pa|d at
matur|ty or

%c) wa|ves the benef|t of any |aw |ntended for the advantage or protect|on
of the ob||gor or

%d) g|ves the ho|der an e|ect|on to requ|re someth|ng to be done |n ||eu of
payment of money
8ut noth|ng |n th|s sect|on sha|| va||date any prov|s|on or st|pu|at|on
otherw|se |||ega|

Sec 6 Omissions seo/ porticu/or money 1he va||d|ty and negot|ab|e
character of an |nstrument are not affected by the fact that
%a) |t |s not dated or

%b) does not spec|fy the va|ue g|ven or that any va|ue had been g|ven
therefor or

%c) does not spec|fy the p|ace where |t |s drawn or the p|ace where |t |s
payab|e or

%d) bears a sea| or

%e) des|gnates a part|cu|ar k|nd of current money |n wh|ch payment |s to
be made
8ut noth|ng |n th|s sect|on sha|| a|ter or repea| any statute requ|r|ng |n
certa|n cases the nature of the cons|derat|on to be stated |n the
|nstrument

Sec 7 Jen poyob/e on demond An |nstrument |s payab|e on
demand
%a) When |t |s so expressed to be payab|e on demand or at s|ght or on
presentat|on or

%b) In wh|ch no t|me for payment |s expressed
Where an |nstrument |s |ssued accepted or |ndorsed when overdue |t |s
as regards the person so |ssu|ng accept|ng or |ndors|ng |t payab|e on
demand

Sec 8 Jen poyob/e to order 1he |nstrument |s payab|e to order where
|t |s drawn payab|e to the order of a spec|f|ed person or to h|m or h|s
order It may be drawn payab|e to the order of
%a) A payee who |s not maker drawer or drawee or

%b) 1he drawer or maker or

%c) 1he drawee or

%d) 1wo or more payees [o|nt|y or

%e) Cne or some of severa| payees or

%f) 1he ho|der of an off|ce for the t|me be|ng
Where the |nstrument |s payab|e to order the payee must be named or
otherw|se |nd|cated there|n w|th reasonab|e certa|nty

Sec 9 Jen poyob/e to beorer 1he |nstrument |s payab|e to
bearer
%a) When |t |s expressed to be so payab|e or

%b) When |t |s payab|e to a person named there|n or bearer or

%c) When |t |s payab|e to the order of a f|ct|t|ous or nonex|st|ng person
and such fact was known to the person mak|ng |t so payab|e or

%d) When the name of the payee does not purport to be the name of any
person or

%e) When the on|y or |ast |ndorsement |s an |ndorsement |n b|ank
Sec 10 1erms wen sufficient 1he |nstrument need not fo||ow the
|anguage of th|s Act but any terms are suff|c|ent wh|ch c|ear|y |nd|cate an
|ntent|on to conform to the requ|rements hereof

Sec 11 uote presumption os to Where the |nstrument or an acceptance
or any |ndorsement thereon |s dated such date |s deemed pr|ma fac|e to
be the true date of the mak|ng draw|ng acceptance or |ndorsement as
the case may be chanrob|es |aw

Sec 12 4ntedoted ond postdoted 1he |nstrument |s not |nva||d for the
reason on|y that |t |s antedated or postdated prov|ded th|s |s not done
for an |||ega| or fraudu|ent purpose 1he person to whom an |nstrument so
dated |s de||vered acqu|res the t|t|e thereto as of the date of de||very

Sec 13 Jen dote moy be inserted Where an |nstrument expressed to
be payab|e at a f|xed per|od after date |s |ssued undated or where the
acceptance of an |nstrument payab|e at a f|xed per|od after s|ght |s
undated any ho|der may |nsert there|n the true date of |ssue or
acceptance and the |nstrument sha|| be payab|e accord|ng|y 1he |nsert|on
of a wrong date does not avo|d the |nstrument |n the hands of a
subsequent ho|der |n due course but as to h|m the date so |nserted |s to
be regarded as the true date

Sec 14 8/onks wen moy be fi//ed Where the |nstrument |s want|ng |n
any mater|a| part|cu|ar the person |n possess|on thereof has a pr|ma fac|e
author|ty to comp|ete |t by f||||ng up the b|anks there|n And a s|gnature
on a b|ank paper de||vered by the person mak|ng the s|gnature |n order
that the paper may be converted |nto a negot|ab|e |nstrument operates as
a pr|ma fac|e author|ty to f||| |t up as such for any amount In order
however that any such |nstrument when comp|eted may be enforced
aga|nst any person who became a party thereto pr|or to |ts comp|et|on |t
must be f|||ed up str|ct|y |n accordance w|th the author|ty g|ven and w|th|n
a reasonab|e t|me 8ut |f any such |nstrument after comp|et|on |s
negot|ated to a ho|der |n due course |t |s va||d and effectua| for a||
purposes |n h|s hands and he may enforce |t as |f |t had been f|||ed up
str|ct|y |n accordance w|th the author|ty g|ven and w|th|n a reasonab|e
t|me

Sec 1S lncomp/ete instrument not de/ivered Where an |ncomp|ete
|nstrument has not been de||vered |t w||| not |f comp|eted and negot|ated
w|thout author|ty be a va||d contract |n the hands of any ho|der as
aga|nst any person whose s|gnature was p|aced thereon before de||very

Sec 16 ue/ivery wen effectuo/ wen presumed Lvery contract on a
negot|ab|e |nstrument |s |ncomp|ete and revocab|e unt|| de||very of the
|nstrument for the purpose of g|v|ng effect thereto As between
|mmed|ate part|es and as regards a remote party other than a ho|der |n
due course the de||very |n order to be effectua| must be made e|ther by
or under the author|ty of the party mak|ng draw|ng accept|ng or
|ndors|ng as the case may be and |n such case the de||very may be
shown to have been cond|t|ona| or for a spec|a| purpose on|y and not for
the purpose of transferr|ng the property |n the |nstrument 8ut where the
|nstrument |s |n the hands of a ho|der |n due course a va||d de||very
thereof by a|| part|es pr|or to h|m so as to make them ||ab|e to h|m |s
conc|us|ve|y presumed And where the |nstrument |s no |onger |n the
possess|on of a party whose s|gnature appears thereon a va||d and
|ntent|ona| de||very by h|m |s presumed unt|| the contrary |s proved

Sec 17 construction were instrument is ombiquous Where the
|anguage of the |nstrument |s amb|guous or there are om|ss|ons there|n
the fo||ow|ng ru|es of construct|on app|y
%a) Where the sum payab|e |s expressed |n words and a|so |n f|gures and
there |s a d|screpancy between the two the sum denoted by the words |s
the sum payab|e but |f the words are amb|guous or uncerta|n reference
may be had to the f|gures to f|x the amount

%b) Where the |nstrument prov|des for the payment of |nterest w|thout
spec|fy|ng the date from wh|ch |nterest |s to run the |nterest runs from
the date of the |nstrument and |f the |nstrument |s undated from the
|ssue thereof

%c) Where the |nstrument |s not dated |t w||| be cons|dered to be dated as
of the t|me |t was |ssued

%d) Where there |s a conf||ct between the wr|tten and pr|nted prov|s|ons of
the |nstrument the wr|tten prov|s|ons preva||

%e) Where the |nstrument |s so amb|guous that there |s doubt whether |t |s
a b||| or note the ho|der may treat |t as e|ther at h|s e|ect|on

%f) Where a s|gnature |s so p|aced upon the |nstrument that |t |s not c|ear
|n what capac|ty the person mak|ng the same |ntended to s|gn he |s to be
deemed an |ndorser

%g) Where an |nstrument conta|n|ng the word l promise to poy |s s|gned
by two or more persons they are deemed to be [o|nt|y and severa||y ||ab|e
thereon

Sec 18 Liobi/ity of person siqninq in trode or ossumed nome No person
|s ||ab|e on the |nstrument whose s|gnature does not appear thereon
except as here|n otherw|se express|y prov|ded 8ut one who s|gns |n a
trade or assumed name w||| be ||ab|e to the same extent as |f he had
s|gned |n h|s own name

Sec 19 5iqnoture by oqent outority ow sown 1he s|gnature of any
party may be made by a du|y author|zed agent No part|cu|ar form of
appo|ntment |s necessary for th|s purpose and the author|ty of the agent
may be estab||shed as |n other cases of agency

Sec 20 Liobi/ity of person siqninq os oqent ond so fort Where the
|nstrument conta|ns or a person adds to h|s s|gnature words |nd|cat|ng
that he s|gns for or on beha|f of a pr|nc|pa| or |n a representat|ve capac|ty
he |s not ||ab|e on the |nstrument |f he was du|y author|zed but the mere
add|t|on of words descr|b|ng h|m as an agent or as f||||ng a representat|ve
character w|thout d|sc|os|ng h|s pr|nc|pa| does not exempt h|m from
persona| ||ab|||ty

Sec 21 5iqnoture by procurotion effect of A s|gnature
by procurotion operates as not|ce that the agent has but a ||m|ted
author|ty to s|gn and the pr|nc|pa| |s bound on|y |n case the agent |n so
s|gn|ng acted w|th|n the actua| ||m|ts of h|s author|ty

Sec 22 ffect of indorsement by infont or corporotion 1he |ndorsement
or ass|gnment of the |nstrument by a corporat|on or by an |nfant passes
the property there|n notw|thstand|ng that from want of capac|ty the
corporat|on or |nfant may |ncur no ||ab|||ty thereon

Sec 23 lorqed siqnoture effect of When a s|gnature |s forged or made
w|thout the author|ty of the person whose s|gnature |t purports to be |t |s
who||y |noperat|ve and no r|ght to reta|n the |nstrument or to g|ve a
d|scharge therefor or to enforce payment thereof aga|nst any party
thereto can be acqu|red through or under such s|gnature un|ess the party
aga|nst whom |t |s sought to enforce such r|ght |s prec|uded from sett|ng
up the forgery or want of author|ty

II CCNSIDLkA1ICN

Sec 24 Presumption of considerotion Lvery negot|ab|e |nstrument |s
deemed primo focie to have been |ssued for a va|uab|e cons|derat|on and
every person whose s|gnature appears thereon to have become a party
thereto for va|ue

Sec 2S vo/ue wot constitutes Va|ue |s any cons|derat|on suff|c|ent to
support a s|mp|e contract An antecedent or preex|st|ng debt const|tutes
va|ue and |s deemed such whether the |nstrument |s payab|e on demand
or at a future t|me

Sec 26 Jot constitutes o/der for vo/ue Where va|ue has at any t|me
been g|ven for the |nstrument the ho|der |s deemed a ho|der for va|ue |n
respect to a|| part|es who become such pr|or to that t|me
Sec 27 When ||en on |nstrument const|tutes ho|der for va|ue Where
the ho|der has a ||en on the |nstrument ar|s|ng e|ther from contract or by
|mp||cat|on of |aw he |s deemed a ho|der for va|ue to the extent of h|s
||en

Sec 28 ffect of wont of considerotion Absence or fa||ure of
cons|derat|on |s a matter of defense as aga|nst any person not a ho|der |n
due course and part|a| fa||ure of cons|derat|on |s a defense pro tanto
whether the fa||ure |s an ascerta|ned and ||qu|dated amount or otherw|se

Sec 29 Liobi/ity of occommodotion porty An accommodat|on party |s
one who has s|gned the |nstrument as maker drawer acceptor or
|ndorser w|thout rece|v|ng va|ue therefor and for the purpose of |end|ng
h|s name to some other person Such a person |s ||ab|e on the |nstrument
to a ho|der for va|ue notw|thstand|ng such ho|der at the t|me of tak|ng
the |nstrument knew h|m to be on|y an accommodat|on party

III NLGC1IA1ICN

Sec 30 Jot constitutes neqotiotion An |nstrument |s negot|ated when
|t |s transferred from one person to another |n such manner as to
const|tute the transferee the ho|der thereof If payab|e to bearer |t |s
negot|ated by de||very |f payab|e to order |t |s negot|ated by the
|ndorsement of the ho|der and comp|eted by de||very

Sec 31 lndorsement ow mode 1he |ndorsement must be wr|tten on
the |nstrument |tse|f or upon a paper attached thereto 1he s|gnature of
the |ndorser w|thout add|t|ona| words |s a suff|c|ent |ndorsement

Sec 32 lndorsement must be of entire instrument 1he |ndorsement
must be an |ndorsement of the ent|re |nstrument An |ndorsement wh|ch
purports to transfer to the |ndorsee a part on|y of the amount payab|e or
wh|ch purports to transfer the |nstrument to two or more |ndorsees
severa||y does not operate as a negot|at|on of the |nstrument 8ut where
the |nstrument has been pa|d |n part |t may be |ndorsed as to the res|due

Sec 33 kinds of indorsement An |ndorsement may be e|ther spec|a| or |n
b|ank and |t may a|so be e|ther restr|ct|ve or qua||f|ed or cond|t|ona|

Sec 34 5pecio/ indorsement indorsement in b/onk A spec|a|
|ndorsement spec|f|es the person to whom or to whose order the
|nstrument |s to be payab|e and the |ndorsement of such |ndorsee |s
necessary to the further negot|at|on of the |nstrument An |ndorsement |n
b|ank spec|f|es no |ndorsee and an |nstrument so |ndorsed |s payab|e to
bearer and may be negot|ated by de||very

Sec 3S 8/onk indorsement ow conqed to specio/ indorsement 1he
ho|der may convert a b|ank |ndorsement |nto a spec|a| |ndorsement by
wr|t|ng over the s|gnature of the |ndorser |n b|ank any contract cons|stent
w|th the character of the |ndorsement

Sec 36 Jen indorsement restrictive An |ndorsement |s restr|ct|ve
wh|ch e|ther
%a) roh|b|ts the further negot|at|on of the |nstrument or

%b) Const|tutes the |ndorsee the agent of the |ndorser or

%c) Vests the t|t|e |n the |ndorsee |n trust for or to the use of some other
persons
8ut the mere absence of words |mp|y|ng power to negot|ate does not
make an |ndorsement restr|ct|ve

Sec 37 ffect of restrictive indorsement riqts of indorsee A restr|ct|ve
|ndorsement confers upon the |ndorsee the r|ght
%a) to rece|ve payment of the |nstrument

%b) to br|ng any act|on thereon that the |ndorser cou|d br|ng

%c) to transfer h|s r|ghts as such |ndorsee where the form of the
|ndorsement author|zes h|m to do so
8ut a|| subsequent |ndorsees acqu|re on|y the t|t|e of the f|rst |ndorsee
under the restr|ct|ve |ndorsement

Sec 38 uo/ified indorsement A qua||f|ed |ndorsement const|tutes the
|ndorser a mere ass|gnor of the t|t|e to the |nstrument It may be made by
add|ng to the |ndorsers s|gnature the words w|thout recourse or any
words of s|m||ar |mport Such an |ndorsement does not |mpa|r the
negot|ab|e character of the |nstrument

Sec 39 conditiono/ indorsement Where an |ndorsement |s cond|t|ona|
the party requ|red to pay the |nstrument may d|sregard the cond|t|on and
make payment to the |ndorsee or h|s transferee whether the cond|t|on has
been fu|f|||ed or not 8ut any person to whom an |nstrument so |ndorsed |s
negot|ated w||| ho|d the same or the proceeds thereof sub[ect to the
r|ghts of the person |ndors|ng cond|t|ona||y

Sec 40 lndorsement of instrument poyob/e to beorer Where an
|nstrument payab|e to bearer |s |ndorsed spec|a||y |t may neverthe|ess
be further negot|ated by de||very but the person |ndors|ng spec|a||y |s
||ab|e as |ndorser to on|y such ho|ders as make t|t|e through h|s
|ndorsement

Sec 41 lndorsement were poyob/e to two or more persons Where an
|nstrument |s payab|e to the order of two or more payees or |ndorsees
who are not partners a|| must |ndorse un|ess the one |ndors|ng has
author|ty to |ndorse for the others

Sec 42 ffect of instrument drown or indorsed to o person os
cosier Where an |nstrument |s drawn or |ndorsed to a person
as cosier or other f|sca| off|cer of a bank or corporat|on |t |s deemed
pr|ma fac|e to be payab|e to the bank or corporat|on of wh|ch he |s such
off|cer and may be negot|ated by e|ther the |ndorsement of the bank or
corporat|on or the |ndorsement of the off|cer

Sec 43 lndorsement were nome is misspe//ed ond so fort Where the
name of a payee or |ndorsee |s wrong|y des|gnated or m|sspe||ed he may
|ndorse the |nstrument as there|n descr|bed add|ng |f he th|nks f|t h|s
proper s|gnature

Sec 44 lndorsement in representotive copocity Where any person |s
under ob||gat|on to |ndorse |n a representat|ve capac|ty he may |ndorse |n
such terms as to negat|ve persona| ||ab|||tyrob|es v|rtua| |aw ||brary

Sec 4S 1ime of indorsement presumption Lxcept where an
|ndorsement bears date after the matur|ty of the |nstrument every
negot|at|on |s deemed pr|ma fac|e to have been effected before the
|nstrument was overdue

Sec 46 P/oce of indorsement presumption Lxcept where the contrary
appears every |ndorsement |s presumed pr|ma fac|e to have been made
at the p|ace where the |nstrument |s dated

Sec 47 continuotion of neqotiob/e corocter An |nstrument negot|ab|e
|n |ts or|g|n cont|nues to be negot|ab|e unt|| |t has been restr|ct|ve|y
|ndorsed or d|scharged by payment or otherw|se

Sec 48 5trikinq out indorsement 1he ho|der may at any t|me str|ke out
any |ndorsement wh|ch |s not necessary to h|s t|t|e 1he |ndorser whose
|ndorsement |s struck out and a|| |ndorsers subsequent to h|m are
thereby re||eved from ||ab|||ty on the |nstrument

Sec 49 1ronsfer witout indorsement effect of Where the ho|der of an
|nstrument payab|e to h|s order transfers |t for va|ue w|thout |ndors|ng |t
the transfer vests |n the transferee such t|t|e as the transferor had there|n
and the transferee acqu|res |n add|t|on the r|ght to have the |ndorsement
of the transferor 8ut for the purpose of determ|n|ng whether the
transferee |s a ho|der |n due course the negot|at|on takes effect as of the
t|me when the |ndorsement |s actua||y made

Sec S0 Jen prior porty moy neqotiote instrument Where an
|nstrument |s negot|ated back to a pr|or party such party may sub[ect to
the prov|s|ons of th|s Act re|ssue and further negot|ab|e the same 8ut he
|s not ent|t|ed to enforce payment thereof aga|nst any |nterven|ng party to
whom he was persona||y ||ab|e

IV kIGn1S CI 1nL nCLDLk

Sec S1 kiqt of o/der to sue poyment 1he ho|der of a negot|ab|e
|nstrument may to sue thereon |n h|s own name and payment to h|m |n
due course d|scharges the |nstrument

Sec S2 Jot constitutes o o/der in due course A ho|der |n due course |s
a ho|der who has taken the |nstrument under the fo||ow|ng cond|t|ons
%a) 1hat |t |s comp|ete and regu|ar upon |ts face

%b) 1hat he became the ho|der of |t before |t was overdue and w|thout
not|ce that |t has been prev|ous|y d|shonored |f such was the fact

%c) 1hat he took |t |n good fa|th and for va|ue

%d) 1hat at the t|me |t was negot|ated to h|m he had no not|ce of any
|nf|rm|ty |n the |nstrument or defect |n the t|t|e of the person negot|at|ng
|t
Sec S3 Jen person not deemed o/der in due course Where an
|nstrument payab|e on demand |s negot|ated on an unreasonab|e |ength
of t|me after |ts |ssue the ho|der |s not deemed a ho|der |n due course

Sec S4 Notice before fu// omount is poid Where the transferee rece|ves
not|ce of any |nf|rm|ty |n the |nstrument or defect |n the t|t|e of the person
negot|at|ng the same before he has pa|d the fu|| amount agreed to be pa|d
therefor he w||| be deemed a ho|der |n due course on|y to the extent of
the amount therefore pa|d by h|m

Sec SS Jen tit/e defective 1he t|t|e of a person who negot|ates an
|nstrument |s defect|ve w|th|n the mean|ng of th|s Act when he obta|ned
the |nstrument or any s|gnature thereto by fraud duress or force and
fear or other un|awfu| means or for an |||ega| cons|derat|on or when he
negot|ates |t |n breach of fa|th or under such c|rcumstances as amount to
a fraud

Sec S6 Jot constitutes notice of defect 1o const|tutes not|ce of an
|nf|rm|ty |n the |nstrument or defect |n the t|t|e of the person negot|at|ng
the same the person to whom |t |s negot|ated must have had actua|
know|edge of the |nf|rm|ty or defect or know|edge of such facts that h|s
act|on |n tak|ng the |nstrument amounted to bad fa|th

Sec S7 kiqts of o/der in due course A ho|der |n due course ho|ds the
|nstrument free from any defect of t|t|e of pr|or part|es and free from
defenses ava||ab|e to pr|or part|es among themse|ves and may enforce
payment of the |nstrument for the fu|| amount thereof aga|nst a|| part|es
||ab|e thereon rob|es v|rtua| |aw ||brary

Sec S8 Jen subject to oriqino/ defense In the hands of any ho|der
other than a ho|der |n due course a negot|ab|e |nstrument |s sub[ect to
the same defenses as |f |t were nonnegot|ab|e 8ut a ho|der who der|ves
h|s t|t|e through a ho|der |n due course and who |s not h|mse|f a party to
any fraud or |||ega||ty affect|ng the |nstrument has a|| the r|ghts of such
former ho|der |n respect of a|| part|es pr|or to the |atter

Sec S9 Jo is deemed o/der in due course Lvery ho|der |s deemed
pr|ma fac|e to be a ho|der |n due course but when |t |s shown that the t|t|e
of any person who has negot|ated the |nstrument was defect|ve the
burden |s on the ho|der to prove that he or some person under whom he
c|a|ms acqu|red the t|t|e as ho|der |n due course 8ut the |astment|oned
ru|e does not app|y |n favor of a party who became bound on the
|nstrument pr|or to the acqu|s|t|on of such defect|ve t|t|e

V LIA8ILI1ILS CI Ak1ILS

Sec 60 Liobi/ity of moker 1he maker of a negot|ab|e |nstrument by
mak|ng |t engages that he w||| pay |t accord|ng to |ts tenor and adm|ts the
ex|stence of the payee and h|s then capac|ty to |ndorse

Sec 61 Liobi/ity of drower 1he drawer by draw|ng the |nstrument
adm|ts the ex|stence of the payee and h|s then capac|ty to |ndorse and
engages that on due presentment the |nstrument w||| be accepted or
pa|d or both accord|ng to |ts tenor and that |f |t be d|shonored and the
necessary proceed|ngs on d|shonor be du|y taken he w||| pay the amount
thereof to the ho|der or to any subsequent |ndorser who may be
compe||ed to pay |t 8ut the drawer may |nsert |n the |nstrument an
express st|pu|at|on negat|v|ng or ||m|t|ng h|s own ||ab|||ty to the ho|der

Sec 62 Liobi/ity of occeptor 1he acceptor by accept|ng the |nstrument
engages that he w||| pay |t accord|ng to the tenor of h|s acceptance and
adm|ts
%a) 1he ex|stence of the drawer the genu|neness of h|s s|gnature and h|s
capac|ty and author|ty to draw the |nstrument and

%b) 1he ex|stence of the payee and h|s then capac|ty to |ndorse
Sec 63 Jen o person deemed indorser A person p|ac|ng h|s s|gnature
upon an |nstrument otherw|se than as maker drawer or acceptor |s
deemed to be |ndorser un|ess he c|ear|y |nd|cates by appropr|ate words
h|s |ntent|on to be bound |n some other capac|ty

Sec 64 Liobi/ity of irrequ/or indorser Where a person not otherw|se a
party to an |nstrument p|aces thereon h|s s|gnature |n b|ank before
de||very he |s ||ab|e as |ndorser |n accordance w|th the fo||ow|ng ru|es
%a) If the |nstrument |s payab|e to the order of a th|rd person he |s ||ab|e
to the payee and to a|| subsequent part|es

%b) If the |nstrument |s payab|e to the order of the maker or drawer or |s
payab|e to bearer he |s ||ab|e to a|| part|es subsequent to the maker or
drawer

%c) If he s|gns for the accommodat|on of the payee he |s ||ab|e to a||
part|es subsequent to the payee
Sec 6S Jorronty were neqotiotion by de/ivery ond so fort Lvery
person negot|at|ng an |nstrument by de||very or by a qua||f|ed
|ndorsement warrants
%a) 1hat the |nstrument |s genu|ne and |n a|| respects what |t purports to
be

%b) 1hat he has a good t|t|e to |t

%c) 1hat a|| pr|or part|es had capac|ty to contract

%d) 1hat he has no know|edge of any fact wh|ch wou|d |mpa|r the va||d|ty
of the |nstrument or render |t va|ue|ess
8ut when the negot|at|on |s by de||very on|y the warranty extends |n
favor of no ho|der other than the |mmed|ate transferee

1he prov|s|ons of subd|v|s|on %c) of th|s sect|on do not app|y to a person
negot|at|ng pub||c or corporat|on secur|t|es other than b|||s and notes

Sec 66 Liobi/ity of qenero/ indorser Lvery |ndorser who |ndorses
w|thout qua||f|cat|on warrants to a|| subsequent ho|ders |n due course
%a) 1he matters and th|ngs ment|oned |n subd|v|s|ons %a) %b) and %c) of the
next preced|ng sect|on and

%b) 1hat the |nstrument |s at the t|me of h|s |ndorsement va||d and
subs|st|ng
And |n add|t|on he engages that on due presentment |t sha|| be
accepted or pa|d or both as the case may be accord|ng to |ts tenor and
that |f |t be d|shonored and the necessary proceed|ngs on d|shonor be du|y
taken he w||| pay the amount thereof to the ho|der or to any subsequent
|ndorser who may be compe||ed to pay |t

Sec 67 Liobi/ity of indorser were poper neqotiob/e by de/ivery Where
a person p|aces h|s |ndorsement on an |nstrument negot|ab|e by de||very
he |ncurs a|| the ||ab|||ty of an |ndorser

Sec 68 Order in wic indorsers ore /iob/e As respect one another
|ndorsers are ||ab|e primo focie |n the order |n wh|ch they |ndorse but
ev|dence |s adm|ss|b|e to show that as between or among themse|ves
they have agreed otherw|se Io|nt payees or [o|nt |ndorsees who |ndorse
are deemed to |ndorse [o|nt|y and severa||y rob|es v|rtua| |aw ||brary

Sec 69 Liobi/ity of on oqent or broker Where a broker or other agent
negot|ates an |nstrument w|thout |ndorsement he |ncurs a|| the ||ab|||t|es
prescr|bed by Sect|on S|xtyf|ve of th|s Act un|ess he d|sc|oses the name of
h|s pr|nc|pa| and the fact that he |s act|ng on|y as agent

VI kLSLN1A1ICN ICk AMLN1

Sec 70 ffect of wont of demond on principo/ debtor resentment for
payment |s not necessary |n order to charge the person pr|mar||y ||ab|e on
the |nstrument but |f the |nstrument |s by |ts terms payab|e at a spec|a|
p|ace and he |s ab|e and w||||ng to pay |t there at matur|ty such ab|||ty
and w||||ngness are equ|va|ent to a tender of payment upon h|s part 8ut
except as here|n otherw|se prov|ded presentment for payment |s
necessary |n order to charge the drawer and |ndorsers

Sec 71 Presentment were instrument is not poyob/e on demond ond
were poyob/e on demond Where the |nstrument |s not payab|e on
demand presentment must be made on the day |t fa||s due Where |t |s
payab|e on demand presentment must be made w|th|n a reasonab|e t|me
after |ts |ssue except that |n the case of a b||| of exchange presentment
for payment w||| be suff|c|ent |f made w|th|n a reasonab|e t|me after the
|ast negot|at|on thereof

Sec 72 Jot constitutes o sufficient presentment resentment for
payment to be suff|c|ent must be made
%a) 8y the ho|der or by some person author|zed to rece|ve payment on h|s
beha|f

%b) At a reasonab|e hour on a bus|ness day

%c) At a proper p|ace as here|n def|ned

%d) 1o the person pr|mar||y ||ab|e on the |nstrument or |f he |s absent or
|naccess|b|e to any person found at the p|ace where the presentment |s
made
Sec 73 P/oce of presentment resentment for payment |s made at the
proper p|ace
%a) Where a p|ace of payment |s spec|f|ed |n the |nstrument and |t |s there
presented

%b) Where no p|ace of payment |s spec|f|ed but the address of the person
to make payment |s g|ven |n the |nstrument and |t |s there presented

%c) Where no p|ace of payment |s spec|f|ed and no address |s g|ven and the
|nstrument |s presented at the usua| p|ace of bus|ness or res|dence of the
person to make payment

%d) In any other case |f presented to the person to make payment
wherever he can be found or |f presented at h|s |ast known p|ace of
bus|ness or res|dence
Sec 74 lnstrument must be exibited 1he |nstrument must be exh|b|ted
to the person from whom payment |s demanded and when |t |s pa|d
must be de||vered up to the party pay|ng |t

Sec 7S Presentment were instrument poyob/e ot bonk Where the
|nstrument |s payab|e at a bank presentment for payment must be made
dur|ng bank|ng hours un|ess the person to make payment has no funds
there to meet |t at any t|me dur|ng the day |n wh|ch case presentment at
any hour before the bank |s c|osed on that day |s suff|c|ent

Sec 76 Presentment were principo/ debtor is deod Where the person
pr|mar||y ||ab|e on the |nstrument |s dead and no p|ace of payment |s
spec|f|ed presentment for payment must be made to h|s persona|
representat|ve |f such there be and |f w|th the exerc|se of reasonab|e
d|||gence he can be found

Sec 77 Presentment to persons /iob/e os portners Where the persons
pr|mar||y ||ab|e on the |nstrument are ||ab|e as partners and no p|ace of
payment |s spec|f|ed presentment for payment may be made to any one
of them even though there has been a d|sso|ut|on of the f|rm

Sec 78 Presentment to joint debtors Where there are severa| persons
not partners pr|mar||y ||ab|e on the |nstrument and no p|ace of payment |s
spec|f|ed presentment must be made to them a||

Sec 79 Jen presentment not required to corqe te drower
resentment for payment |s not requ|red |n order to charge the drawer
where he has no r|ght to expect or requ|re that the drawee or acceptor
w||| pay the |nstrument

Sec 80 Jen presentment not required to corqe te indorser
resentment |s not requ|red |n order to charge an |ndorser where the
|nstrument was made or accepted for h|s accommodat|on and he has no
reason to expect that the |nstrument w||| be pa|d |f presented

Sec 81 Jen de/oy in mokinq presentment is excused De|ay |n mak|ng
presentment for payment |s excused when the de|ay |s caused by
c|rcumstances beyond the contro| of the ho|der and not |mputab|e to h|s
defau|t m|sconduct or neg||gence When the cause of de|ay ceases to
operate presentment must be made w|th reasonab|e d|||gence

Sec 82 Jen presentment for poyment is excused resentment for
payment |s excused
%a) Where after the exerc|se of reasonab|e d|||gence presentment as
requ|red by th|s Act cannot be made

%b) Where the drawee |s a f|ct|t|ous person

%c) 8y wa|ver of presentment express or |mp||ed
Sec 83 Jen instrument disonored by nonpoyment 1he |nstrument |s
d|shonored by nonpayment when
%a) It |s du|y presented for payment and payment |s refused or cannot be
obta|ned or

%b) resentment |s excused and the |nstrument |s overdue and unpa|d
Sec 84 Liobi/ity of person secondori/y /iob/e wen instrument
disonored Sub[ect to the prov|s|ons of th|s Act when the |nstrument |s
d|shonored by nonpayment an |mmed|ate r|ght of recourse to a|| part|es
secondar||y ||ab|e thereon accrues to the ho|derrob|es v|rtua| |aw ||brary

Sec 8S 1ime of moturity Lvery negot|ab|e |nstrument |s payab|e at the
t|me f|xed there|n w|thout grace When the day of matur|ty fa||s upon
Sunday or a ho||day the |nstruments fa|||ng due or becom|ng payab|e on
Saturday are to be presented for payment on the next succeed|ng bus|ness
day except that |nstruments payab|e on demand may at the opt|on of the
ho|der be presented for payment before twe|ve oc|ock noon on Saturday
when that ent|re day |s not a ho||day

Sec 86 1ime ow computed When the |nstrument |s payab|e at a f|xed

per|od after date after s|ght or after that happen|ng of a spec|f|ed event
the t|me of payment |s determ|ned by exc|ud|ng the day from wh|ch the
t|me |s to beg|n to run and by |nc|ud|ng the date of payment

Sec 87 ku/e were instrument poyob/e ot bonk Where the |nstrument |s

made payab|e at a bank |t |s equ|va|ent to an order to the bank to pay the
same for the account of the pr|nc|pa| debtor thereon

Sec 88 Jot constitutes poyment in due course ayment |s made |n due

course when |t |s made at or after the matur|ty of the payment to the
ho|der thereof |n good fa|th and w|thout not|ce that h|s t|t|e |s defect|ve

VII NC1ICL CI DISnCNCk

Sec 89 1o wom notice of disonor must be qiven Lxcept as here|n

otherw|se prov|ded when a negot|ab|e |nstrument has been d|shonored
by nonacceptance or nonpayment not|ce of d|shonor must be g|ven to
the drawer and to each |ndorser and any drawer or |ndorser to whom
such not|ce |s not g|ven |s d|scharged

Sec 90 8y wom qiven 1he not|ce may be g|ven by or on beha|f of the

ho|der or by or on beha|f of any party to the |nstrument who m|ght be
compe||ed to pay |t to the ho|der and who upon tak|ng |t up wou|d have
a r|ght to re|mbursement from the party to whom the not|ce |s g|ven

Sec 91 Notice qiven by oqent Not|ce of d|shonor may be g|ven by any

agent e|ther |n h|s own name or |n the name of any party ent|t|ed to g|ven
not|ce whether that party be h|s pr|nc|pa| or not

Sec 92 ffect of notice on beo/f of o/der Where not|ce |s g|ven by or

on beha|f of the ho|der |t |nures to the benef|t of a|| subsequent ho|ders
and a|| pr|or part|es who have a r|ght of recourse aga|nst the party to
whom |t |s g|ven

Sec 93 ffect were notice is qiven by porty entit/ed tereto Where

not|ce |s g|ven by or on beha|f of a party ent|t|ed to g|ve not|ce |t |nures to
the benef|t of the ho|der and a|| part|es subsequent to the party to whom
not|ce |s g|ven chanrob|es |aw

Sec 94 Jen oqent moy qive notice Where the |nstrument has been
d|shonored |n the hands of an agent he may e|ther h|mse|f g|ve not|ce to
the part|es ||ab|e thereon or he may g|ve not|ce to h|s pr|nc|pa| If he g|ves
not|ce to h|s pr|nc|pa| he must do so w|th|n the same t|me as |f he were
the ho|der and the pr|nc|pa| upon the rece|pt of such not|ce has h|mse|f
the same t|me for g|v|ng not|ce as |f the agent had been an |ndependent
ho|der

Sec 9S Jen notice sufficient A wr|tten not|ce need not be s|gned and
an |nsuff|c|ent wr|tten not|ce may be supp|emented and va||dated by
verba| commun|cat|on A m|sdescr|pt|on of the |nstrument does not v|t|ate
the not|ce un|ess the party to whom the not|ce |s g|ven |s |n fact m|s|ed
thereby

Sec 96 lorm of notice 1he not|ce may be |n wr|t|ng or mere|y ora| and
may be g|ven |n any terms wh|ch suff|c|ent|y |dent|fy the |nstrument and
|nd|cate that |t has been d|shonored by nonacceptance or nonpayment
It may |n a|| cases be g|ven by de||ver|ng |t persona||y or through the
ma||s

Sec 97 1o wom notice moy be qiven Not|ce of d|shonor may be g|ven

e|ther to the party h|mse|f or to h|s agent |n that beha|f

Sec 98 Notice were porty is deod When any party |s dead and h|s
death |s known to the party g|v|ng not|ce the not|ce must be g|ven to a
persona| representat|ve |f there be one and |f w|th reasonab|e d|||gence
he can be found If there be no persona| representat|ve not|ce may be
sent to the |ast res|dence or |ast p|ace of bus|ness of the deceased

Sec 99 Notice to portners Where the part|es to be not|f|ed are partners

not|ce to any one partner |s not|ce to the f|rm even though there has been
a d|sso|ut|on

Sec 100 Notice to persons joint/y /iob/e Not|ce to [o|nt persons who are
not partners must be g|ven to each of them un|ess one of them has
author|ty to rece|ve such not|ce for the others

Sec 101 Notice to bonkrupt Where a party has been ad[udged a

bankrupt or an |nso|vent or has made an ass|gnment for the benef|t of
cred|tors not|ce may be g|ven e|ther to the party h|mse|f or to h|s trustee
or ass|gnee

Sec 102 1ime witin wic notice must be qiven Not|ce may be g|ven as
soon as the |nstrument |s d|shonored and un|ess de|ay |s excused as
here|nafter prov|ded must be g|ven w|th|n the t|me f|xed by th|s Act

Sec 103 Jere porties reside in some p/oce Where the person g|v|ng
and the person to rece|ve not|ce res|de |n the same p|ace not|ce must be
g|ven w|th|n the fo||ow|ng t|mes
%a) If g|ven at the p|ace of bus|ness of the person to rece|ve not|ce |t must
be g|ven before the c|ose of bus|ness hours on the day fo||ow|ng

%b) If g|ven at h|s res|dence |t must be g|ven before the usua| hours of rest
on the day fo||ow|ng

%c) If sent by ma|| |t must be depos|ted |n the post off|ce |n t|me to reach
h|m |n usua| course on the day fo||ow|ng
Sec 104 Jere porties reside in different p/oces Where the person
g|v|ng and the person to rece|ve not|ce res|de |n d|fferent p|aces the
not|ce must be g|ven w|th|n the fo||ow|ng t|mes
%a) If sent by ma|| |t must be depos|ted |n the post off|ce |n t|me to go by
ma|| the day fo||ow|ng the day of d|shonor or |f there be no ma|| at a
conven|ent hour on |ast day by the next ma|| thereafter

%b) If g|ven otherw|se than through the post off|ce then w|th|n the t|me
that not|ce wou|d have been rece|ved |n due course of ma|| |f |t had been
depos|ted |n the post off|ce w|th|n the t|me spec|f|ed |n the |ast
subd|v|s|on
Sec 10S Jen sender deemed to ove qiven due notice Where not|ce of
d|shonor |s du|y addressed and depos|ted |n the post off|ce the sender |s
deemed to have g|ven due not|ce notw|thstand|ng any m|scarr|age |n the
ma||s

Sec 106 ueposit in post office wot constitutes Not|ce |s deemed to

have been depos|ted |n the postoff|ce when depos|ted |n any branch post
off|ce or |n any |etter box under the contro| of the postoff|ce department

Sec 107 Notice to subsequent porty time of Where a party rece|ves

not|ce of d|shonor he has after the rece|pt of such not|ce the same t|me
for g|v|ng not|ce to antecedent part|es that the ho|der has after the
d|shonor

Sec 108 Jere notice must be sent Where a party has added an
address to h|s s|gnature not|ce of d|shonor must be sent to that address
but |f he has not g|ven such address then the not|ce must be sent as
fo||ows
%a) L|ther to the postoff|ce nearest to h|s p|ace of res|dence or to the post
off|ce where he |s accustomed to rece|ve h|s |etters or

%b) If he ||ves |n one p|ace and has h|s p|ace of bus|ness |n another not|ce
may be sent to e|ther p|ace or

%c) If he |s so[ourn|ng |n another p|ace not|ce may be sent to the p|ace

where he |s so so[ourn|ng
8ut where the not|ce |s actua||y rece|ved by the party w|th|n the t|me
spec|f|ed |n th|s Act |t w||| be suff|c|ent though not sent |n accordance
w|th the requ|rement of th|s sect|on

Sec 109 Joiver of notice Not|ce of d|shonor may be wa|ved e|ther
before the t|me of g|v|ng not|ce has arr|ved or after the om|ss|on to g|ve
due not|ce and the wa|ver may be expressed or |mp||ed

Sec 110 Jom offected by woiver Where the wa|ver |s embod|ed |n the
|nstrument |tse|f |t |s b|nd|ng upon a|| part|es but where |t |s wr|tten
above the s|gnature of an |ndorser |t b|nds h|m on|y

Sec 111 Joiver of protest A wa|ver of protest whether |n the case of a

fore|gn b||| of exchange or other negot|ab|e |nstrument |s deemed to be a
wa|ver not on|y of a forma| protest but a|so of presentment and not|ce of
d|shonor

Sec 112 Jen notice is dispensed wit Not|ce of d|shonor |s d|spensed

w|th when after the exerc|se of reasonab|e d|||gence |t cannot be g|ven to
or does not reach the part|es sought to be charged

Sec 113 ue/oy in qivinq notice ow excused De|ay |n g|v|ng not|ce of

d|shonor |s excused when the de|ay |s caused by c|rcumstances beyond the
contro| of the ho|der and not |mputab|e to h|s defau|t m|sconduct or
neg||gence When the cause of de|ay ceases to operate not|ce must be
g|ven w|th reasonab|e d|||gence

Sec 114 Jen notice need not be qiven to drower Not|ce of d|shonor |s
not requ|red to be g|ven to the drawer |n e|ther of the fo||ow|ng cases
%a) Where the drawer and drawee are the same person

%b) When the drawee |s f|ct|t|ous person or a person not hav|ng capac|ty to
contract

%c) When the drawer |s the person to whom the |nstrument |s presented
for payment

%d) Where the drawer has no r|ght to expect or requ|re that the drawee or
acceptor w||| honor the |nstrument

%e) Where the drawer has countermanded payment

Sec 11S Jen notice need not be qiven to indorser Not|ce of d|shonor
|s not requ|red to be g|ven to an |ndorser |n e|ther of the fo||ow|ng cases
%a) When the drawee |s a f|ct|t|ous person or person not hav|ng capac|ty to
contract and the |ndorser was aware of that fact at the t|me he |ndorsed
the |nstrument

%b) Where the |ndorser |s the person to whom the |nstrument |s presented
for payment

%c) Where the |nstrument was made or accepted for h|s accommodat|on
Sec 116 Notice of nonpoyment were occeptonce refused Where due
not|ce of d|shonor by nonacceptance has been g|ven not|ce of a
subsequent d|shonor by nonpayment |s not necessary un|ess |n the
meant|me the |nstrument has been accepted

Sec 117 ffect of omission to qive notice of nonocceptonce An om|ss|on

to g|ve not|ce of d|shonor by nonacceptance does not pre[ud|ce the r|ghts
of a ho|der |n due course subsequent to the om|ss|on

Sec 118 Jen protest need not be mode wen must be mode Where
any negot|ab|e |nstrument has been d|shonored |t may be protested for
nonacceptance or nonpayment as the case may be but protest |s not
requ|red except |n the case of fore|gn b|||s of exchangerob|es v|rtua| |aw
||brary

VIII DISCnAkGL CI NLGC1IA8LLINS1kUMLN1S

Sec 119 lnstrument ow discorqed A negot|ab|e |nstrument |s
d|scharged
%a) 8y payment |n due course by or on beha|f of the pr|nc|pa| debtor

%b) 8y payment |n due course by the party accommodated where the

|nstrument |s made or accepted for h|s accommodat|on

%c) 8y the |ntent|ona| cance||at|on thereof by the ho|der

%d) 8y any other act wh|ch w||| d|scharge a s|mp|e contract for the
payment of money

%e) When the pr|nc|pa| debtor becomes the ho|der of the |nstrument at or
after matur|ty |n h|s own r|ght
Sec 120 Jen persons secondori/y /iob/e on te instrument ore
discorqed A person secondar||y ||ab|e on the |nstrument |s d|scharged
%a) 8y any act wh|ch d|scharges the |nstrument

%b) 8y the |ntent|ona| cance||at|on of h|s s|gnature by the ho|der

%c) 8y the d|scharge of a pr|or party

%d) 8y a va||d tender or payment made by a pr|or party

%e) 8y a re|ease of the pr|nc|pa| debtor un|ess the ho|ders r|ght of recourse
aga|nst the party secondar||y ||ab|e |s express|y reserved

%f) 8y any agreement b|nd|ng upon the ho|der to extend the t|me of
payment or to postpone the ho|ders r|ght to enforce the |nstrument
un|ess made w|th the assent of the party secondar||y ||ab|e or un|ess the
r|ght of recourse aga|nst such party |s express|y reserved
Sec 121 kiqt of porty wo discorqes instrument Where the
|nstrument |s pa|d by a party secondar||y ||ab|e thereon |t |s not
d|scharged but the party so pay|ng |t |s rem|tted to h|s former r|ghts as
regard a|| pr|or part|es and he may str|ke out h|s own and a|| subsequent
|ndorsements and aga|nst negot|ate the |nstrument except
%a) Where |t |s payab|e to the order of a th|rd person and has been pa|d by
the drawer and

%b) Where |t was made or accepted for accommodat|on and has been pa|d
by the party accommodated
Sec 122 kenunciotion by o/der 1he ho|der may express|y renounce h|s
r|ghts aga|nst any party to the |nstrument before at or after |ts matur|ty
An abso|ute and uncond|t|ona| renunc|at|on of h|s r|ghts aga|nst the
pr|nc|pa| debtor made at or after the matur|ty of the |nstrument
d|scharges the |nstrument 8ut a renunc|at|on does not affect the r|ghts of
a ho|der |n due course w|thout not|ce A renunc|at|on must be |n wr|t|ng
un|ess the |nstrument |s de||vered up to the person pr|mar||y ||ab|e
thereon

Sec 123 conce//otion unintentiono/ burden of proof A cance||at|on

made un|ntent|ona||y or under a m|stake or w|thout the author|ty of the
ho|der |s |noperat|ve but where an |nstrument or any s|gnature thereon
appears to have been cance||ed the burden of proof ||es on the party who
a||eges that the cance||at|on was made un|ntent|ona||y or under a m|stake
or w|thout author|ty

Sec 124 4/terotion of instrument effect of Where a negot|ab|e

|nstrument |s mater|a||y a|tered w|thout the assent of a|| part|es ||ab|e
thereon |t |s avo|ded except as aga|nst a party who has h|mse|f made
author|zed or assented to the a|terat|on and subsequent |ndorsers
8ut when an |nstrument has been mater|a||y a|tered and |s |n the hands of
a ho|der |n due course not a party to the a|terat|on he may enforce
payment thereof accord|ng to |ts or|g|na| tenor

Sec 12S Jot constitutes o moterio/ o/terotion Any a|terat|on wh|ch

changes
%a) 1he date

%b) 1he sum payab|e e|ther for pr|nc|pa| or |nterest

%c) 1he t|me or p|ace of payment

%d) 1he number or the re|at|ons of the part|es

%e) 1he med|um or currency |n wh|ch payment |s to be made

%f) Cr wh|ch adds a p|ace of payment where no p|ace of payment |s

spec|f|ed or any other change or add|t|on wh|ch a|ters the effect of the
|nstrument |n any respect |s a mater|a| a|terat|on
8ILLS CI LkCnANGL

Ik ICkM AND IN1LkkL1A1ICN

Sec 126 8i// of exconqe defined A b||| of exchange |s an uncond|t|ona|

order |n wr|t|ng addressed by one person to another s|gned by the person
g|v|ng |t requ|r|ng the person to whom |t |s addressed to pay on demand
or at a f|xed or determ|nab|e future t|me a sum certa|n |n money to order
or to bearer

Sec 127 8i// not on ossiqnment of funds in onds of drowee A b||| of

|tse|f does not operate as an ass|gnment of the funds |n the hands of the
drawee ava||ab|e for the payment thereof and the drawee |s not ||ab|e on
the b||| un|ess and unt|| he accepts the same

Sec 128 8i// oddressed to more ton one drowee A b||| may be
addressed to two or more drawees [o|nt|y whether they are partners or
not but not to two or more drawees |n the a|ternat|ve or |n success|on

Sec 129 ln/ond ond foreiqn bi//s of exconqe An |n|and b||| of exchange
|s a b||| wh|ch |s or on |ts face purports to be both drawn and payab|e
w|th|n the h|||pp|nes Any other b||| |s a fore|gn b||| Un|ess the contrary
appears on the face of the b||| the ho|der may treat |t as an |n|and b|||

Sec 130 Jen bi// moy be treoted os promissory note Where |n a b|||
the drawer and drawee are the same person or where the drawee |s a
f|ct|t|ous person or a person not hav|ng capac|ty to contract the ho|der
may treat the |nstrument at h|s opt|on e|ther as a b||| of exchange or as a
prom|ssory note

Sec 131 keferee in cose of need 1he drawer of a b||| and any |ndorser
may |nsert thereon the name of a person to whom the ho|der may resort
|n case of need that |s to say |n case the b||| |s d|shonored by non
acceptance or nonpayment Such person |s ca||ed a referee |n case of
need It |s |n the opt|on of the ho|der to resort to the referee |n case of
need or not as he may see f|t

k ACCL1ANCL

Sec 132 4cceptonce ow mode by ond so fort 1he acceptance of a b|||

|s the s|gn|f|cat|on by the drawee of h|s assent to the order of the drawer
1he acceptance must be |n wr|t|ng and s|gned by the drawee It must not
express that the drawee w||| perform h|s prom|se by any other means than
the payment of money

Sec 133 no/der entit/ed to occeptonce on foce of bi// 1he ho|der of a b|||
present|ng the same for acceptance may requ|re that the acceptance be
wr|tten on the b||| and |f such request |s refused may treat the b||| as
d|shonored

Sec 134 4cceptonce by seporote instrument Where an acceptance |s

wr|tten on a paper other than the b||| |tse|f |t does not b|nd the acceptor
except |n favor of a person to whom |t |s shown and who on the fa|th
thereof rece|ves the b||| for va|ue

Sec 13S Promise to occept wen equivo/ent to occeptonce An

uncond|t|ona| prom|se |n wr|t|ng to accept a b||| before |t |s drawn |s
deemed an actua| acceptance |n favor of every person who upon the fa|th
thereof rece|ves the b||| for va|ue

Sec 136 1ime o//owed drowee to occept 1he drawee |s a||owed twenty
four hours after presentment |n wh|ch to dec|de whether or not he w|||
accept the b||| the acceptance |f g|ven dates as of the day of
presentat|on

Sec 137 Liobi/ity of drowee returninq or destroyinq bi// Where a drawee

to whom a b||| |s de||vered for acceptance destroys the same or refuses
w|th|n twentyfour hours after such de||very or w|th|n such other per|od as
the ho|der may a||ow to return the b||| accepted or nonaccepted to the
ho|der he w||| be deemed to have accepted the same

Sec 138 4cceptonce of incomp/ete bi// A b||| may be accepted before |t

has been s|gned by the drawer or wh||e otherw|se |ncomp|ete or when |t
|s overdue or after |t has been d|shonored by a prev|ous refusa| to accept
or by non payment 8ut when a b||| payab|e after s|ght |s d|shonored by
nonacceptance and the drawee subsequent|y accepts |t the ho|der |n the
absence of any d|fferent agreement |s ent|t|ed to have the b||| accepted as
of the date of the f|rst presentment

Sec 139 kinds of occeptonce An acceptance |s e|ther genera| or

qua||f|ed A genera| acceptance assents w|thout qua||f|cat|on to the order
of the drawer A qua||f|ed acceptance |n express terms var|es the effect of
the b||| as drawn

Sec 140 Jot constitutes o qenero/ occeptonce An acceptance to pay at

a part|cu|ar p|ace |s a genera| acceptance un|ess |t express|y states that the
b||| |s to be pa|d there on|y and not e|sewhere

Sec 141 uo/ified occeptonce An acceptance |s qua||f|ed wh|ch |s

%a) Cond|t|ona| that |s to say wh|ch makes payment by the acceptor
dependent on the fu|f|||ment of a cond|t|on there|n stated

%b) art|a| that |s to say an acceptance to pay part on|y of the amount for
wh|ch the b||| |s drawn

%c) Loca| that |s to say an acceptance to pay on|y at a part|cu|ar p|ace

%d) ua||f|ed as to t|me

%e) 1he acceptance of some one or more of the drawees but not of a||
Sec 142 kiqts of porties os to quo/ified occeptonce 1he ho|der may
refuse to take a qua||f|ed acceptance and |f he does not obta|n an
unqua||f|ed acceptance he may treat the b||| as d|shonored by non
acceptance Where a qua||f|ed acceptance |s taken the drawer and
|ndorsers are d|scharged from ||ab|||ty on the b||| un|ess they have
express|y or |mp||ed|y author|zed the ho|der to take a qua||f|ed
acceptance or subsequent|y assent thereto When the drawer or an
|ndorser rece|ves not|ce of a qua||f|ed acceptance he must w|th|n a
reasonab|e t|me express h|s d|ssent to the ho|der or he w||| be deemed to
have assented thereto

kI kLSLN1MLN1 ICk ACCL1ANCL

Sec 143 Jen presentment for occeptonce must be mode resentment
for acceptance must be made
%a) Where the b||| |s payab|e after s|ght or |n any other case where
presentment for acceptance |s necessary |n order to f|x the matur|ty of the
|nstrument or

%b) Where the b||| express|y st|pu|ates that |t sha|| be presented for
acceptance or

%c) Where the b||| |s drawn payab|e e|sewhere than at the res|dence or
p|ace of bus|ness of the drawee
In no other case |s presentment for acceptance necessary |n order to
render any party to the b||| ||ab|e

Sec 144 Jen foi/ure to present re/eoses drower ond indorser Lxcept as
here|n otherw|se prov|ded the ho|der of a b||| wh|ch |s requ|red by the
next preced|ng sect|on to be presented for acceptance must e|ther present
|t for acceptance or negot|ate |t w|th|n a reasonab|e t|me If he fa||s to do
so the drawer and a|| |ndorsers are d|scharged

Sec 14S Presentment ow mode resentment for acceptance must be

made by or on beha|f of the ho|der at a reasonab|e hour on a bus|ness
day and before the b||| |s overdue to the drawee or some person
author|zed to accept or refuse acceptance on h|s beha|f and
%a) Where a b||| |s addressed to two or more drawees who are not
partners presentment must be made to them a|| un|ess one has author|ty
to accept or refuse acceptance for a|| |n wh|ch case presentment may be
made to h|m on|y

%b) Where the drawee |s dead presentment may be made to h|s persona|
representat|ve

%c) Where the drawee has been ad[udged a bankrupt or an |nso|vent or has
made an ass|gnment for the benef|t of cred|tors presentment may be
made to h|m or to h|s trustee or ass|gnee
Sec 146 On wot doys presentment moy be mode A b||| may be
presented for acceptance on any day on wh|ch negot|ab|e |nstruments
may be presented for payment under the prov|s|ons of Sect|ons seventy
two and e|ghtyf|ve of th|s Act When Saturday |s not otherw|se a ho||day
presentment for acceptance may be made before twe|ve oc|ock noon on
that day

Sec 147 Presentment were time is insufficient Where the ho|der of a

b||| drawn payab|e e|sewhere than at the p|ace of bus|ness or the
res|dence of the drawee has no t|me w|th the exerc|se of reasonab|e
d|||gence to present the b||| for acceptance before present|ng |t for
payment on the day that |t fa||s due the de|ay caused by present|ng the
b||| for acceptance before present|ng |t for payment |s excused and does
not d|scharge the drawers and |ndorsers

Sec 148 Jere presentment is excused resentment for acceptance |s

excused and a b||| may be treated as d|shonored by nonacceptance |n
e|ther of the fo||ow|ng cases
%a) Where the drawee |s dead or has absconded or |s a f|ct|t|ous person
or a person not hav|ng capac|ty to contract by b|||

%b) Where after the exerc|se of reasonab|e d|||gence presentment can not
be made

%c) Where a|though presentment has been |rregu|ar acceptance has been
refused on some other ground
Sec 149 Jen disonored by nonocceptonce A b||| |s d|shonored by
nonacceptance
%a) When |t |s du|y presented for acceptance and such an acceptance as |s
prescr|bed by th|s Act |s refused or can not be obta|ned or

%b) When presentment for acceptance |s excused and the b||| |s not
accepted
Sec 1S0 uuty of o/der were bi// not occepted Where a b||| |s du|y
presented for acceptance and |s not accepted w|th|n the prescr|bed t|me
the person present|ng |t must treat the b||| as d|shonored by
nonacceptance or he |oses the r|ght of recourse aga|nst the drawer and
|ndorsers

Sec 1S1 kiqts of o/der were bi// not occepted When a b||| |s
d|shonored by nonacceptance an |mmed|ate r|ght of recourse aga|nst the
drawer and |ndorsers accrues to the ho|der and no presentment for
payment |s necessary

kII kC1LS1

Sec 1S2 ln wot coses protest necessory Where a fore|gn b||| appear|ng
on |ts face to be such |s d|shonored by nonacceptance |t must be du|y
protested for nonacceptance by nonacceptance |s d|shonored and where
such a b||| wh|ch has not prev|ous|y been d|shonored by nonpayment |t
must be du|y protested for nonpayment If |t |s not so protested the
drawer and |ndorsers are d|scharged Where a b||| does not appear on |ts
face to be a fore|gn b||| protest thereof |n case of d|shonor |s
unnecessary

Sec 1S3 Protest ow mode 1he protest must be annexed to the b||| or
must conta|n a copy thereof and must be under the hand and sea| of the
notary mak|ng |t and must spec|fy
%a) 1he t|me and p|ace of presentment

%b) 1he fact that presentment was made and the manner thereof

%c) 1he cause or reason for protest|ng the b|||

%d) 1he demand made and the answer g|ven |f any or the fact that the
drawee or acceptor cou|d not be found
Sec 1S4 Protest by wom mode rotest may be made by
%a) A notary pub||c or

%b) 8y any respectab|e res|dent of the p|ace where the b||| |s d|shonored |n
the presence of two or more cred|b|e w|tnesses
Sec 1SS Protest wen to be mode When a b||| |s protested such
protest must be made on the day of |ts d|shonor un|ess de|ay |s excused as
here|n prov|ded When a b||| has been du|y noted the protest may be
subsequent|y extended as of the date of the not|ng

Sec 1S6 Protest were mode A b||| must be protested at the p|ace
where |t |s d|shonored except that when a b||| drawn payab|e at the p|ace
of bus|ness or res|dence of some person other than the drawee has been
d|shonored by nonacceptance |t must be protested for nonpayment at
the p|ace where |t |s expressed to be payab|e and no further presentment
for payment to or demand on the drawee |s necessary

Sec 1S7 Protest bot for nonocceptonce ond nonpoyment A b||| wh|ch
has been protested for nonacceptance may be subsequent|y protested for
nonpayment

Sec 1S8 Protest before moturity were occeptor inso/vent Where the
acceptor has been ad[udged a bankrupt or an |nso|vent or has made an
ass|gnment for the benef|t of cred|tors before the b||| matures the ho|der
may cause the b||| to be protested for better secur|ty aga|nst the drawer
and |ndorsersrob|es v|rtua| |aw ||brary

Sec 1S9 Jen protest dispensed wit rotest |s d|spensed w|th by any
c|rcumstances wh|ch wou|d d|spense w|th not|ce of d|shonor De|ay |n
not|ng or protest|ng |s excused when de|ay |s caused by c|rcumstances
beyond the contro| of the ho|der and not |mputab|e to h|s defau|t
m|sconduct or neg||gence When the cause of de|ay ceases to operate the
b||| must be noted or protested w|th reasonab|e d|||gence

Sec 160 Protest were bi// is /ost ond so fort When a b||| |s |ost or
destroyed or |s wrong|y deta|ned from the person ent|t|ed to ho|d |t
protest may be made on a copy or wr|tten part|cu|ars thereof

kIII ACCL1ANCL ICk nCNCk

Sec 161 Jen bi// moy be occepted for onor When a b||| of exchange
has been protested for d|shonor by nonacceptance or protested for better
secur|ty and |s not overdue any person not be|ng a party a|ready ||ab|e
thereon may w|th the consent of the ho|der |ntervene and accept the
b||| supro protest for the honor of any party ||ab|e thereon or for the honor
of the person for whose account the b||| |s drawn 1he acceptance for
honor may be for part on|y of the sum for wh|ch the b||| |s drawn and
where there has been an acceptance for honor for one party there may be
a further acceptance by a d|fferent person for the honor of another party

Sec 162 4cceptonce for onor ow mode An acceptance for honor

supra protest must be |n wr|t|ng and |nd|cate that |t |s an acceptance for
honor and must be s|gned by the acceptor for honorchanrob|es |aw

Sec 163 Jen deemed to be on occeptonce for onor of te drower

Where an acceptance for honor does not express|y state for whose honor
|t |s made |t |s deemed to be an acceptance for the honor of the drawer

Sec 164 Liobi/ity of te occeptor for onor 1he acceptor for honor |s
||ab|e to the ho|der and to a|| part|es to the b||| subsequent to the party for
whose honor he has accepted

Sec 16S 4qreement of occeptor for onor 1he acceptor for honor by
such acceptance engages that he w||| on due presentment pay the b|||
accord|ng to the terms of h|s acceptance prov|ded |t sha|| not have been
pa|d by the drawee and prov|ded a|so that |s sha|| have been du|y
presented for payment and protested for nonpayment and not|ce of
d|shonor g|ven to h|m

Sec 166 Moturity of bi// poyob/e ofter siqt occepted for onor Where
a b||| payab|e after s|ght |s accepted for honor |ts matur|ty |s ca|cu|ated
from the date of the not|ng for nonacceptance and not from the date of
the acceptance for honor

Sec 167 Protest of bi// occepted for onor ond so fort Where a
d|shonored b||| has been accepted for honor supra protest or conta|ns a
referee |n case of need |t must be protested for nonpayment before |t |s
presented for payment to the acceptor for honor or referee |n case of
need

Sec 168 Presentment for poyment to occeptor for onor owmode

resentment for payment to the acceptor for honor must be made as
fo||ows
%a) If |t |s to be presented |n the p|ace where the protest for nonpayment
was made |t must be presented not |ater than the day fo||ow|ng |ts
matur|ty

%b) If |t |s to be presented |n some other p|ace than the p|ace where |t was
protested then |t must be forwarded w|th|n the t|me spec|f|ed |n Sect|on
one hundred and four
Sec 169 Jen de/oy in mokinq presentment is excused 1he prov|s|ons
of Sect|on e|ghtyone app|y where there |s de|ay |n mak|ng presentment to
the acceptor for honor or referee |n case of need

Sec 170 uisonor of bi// by occeptor for onor When the b||| |s
d|shonored by the acceptor for honor |t must be protested for non
payment by h|m

kIV AMLN1 ICk nCNCk

Sec 171 Jo moy moke poyment for onor Where a b||| has been
protested for nonpayment any person may |ntervene and pay
|t supro protest for the honor of any person ||ab|e thereon or for the honor
of the person for whose account |t was drawn

Sec 172 Poyment for onor ow mode 1he payment for

honor supro protest |n order to operate as such and not as a mere
vo|untary payment must be attested by a notar|a| act of honor wh|ch may
be appended to the protest or form an extens|on to |t

Sec 173 uec/orotion before poyment for onor 1he notar|a| act of honor
must be founded on a dec|arat|on made by the payer for honor or by h|s
agent |n that beha|f dec|ar|ng h|s |ntent|on to pay the b||| for honor and for
whose honor he pays

Sec 174 Preference of porties offerinq to poy for onor Where two or
more persons offer to pay a b||| for the honor of d|fferent part|es the
person whose payment w||| d|scharge most part|es to the b||| |s to be g|ven
the preference

Sec 17S ffect on subsequent porties were bi// is poid foronor Where
a b||| has been pa|d for honor a|| part|es subsequent to the party for
whose honor |t |s pa|d are d|scharged but the payer for honor |s
subrogated for and succeeds to both the r|ghts and dut|es of the ho|der
as regards the party for whose honor he pays and a|| part|es ||ab|e to the
|atter

Sec 176 Jere o/der refuses to receive poyment supro protest Where
the ho|der of a b||| refuses to rece|ve payment supro protest he |oses h|s
r|ght of recourse aga|nst any party who wou|d have been d|scharged by
such payment

Sec 177 kiqts of poyer for onor 1he payer for honor on pay|ng to the
ho|der the amount of the b||| and the notar|a| expenses |nc|denta| to |ts
d|shonor |s ent|t|ed to rece|ve both the b||| |tse|f and the protest

kV 8ILLS IN SL1

Sec 178 8i//s in set constitute one bi// Where a b||| |s drawn |n a set
each part of the set be|ng numbered and conta|n|ng a reference to the
other parts the who|e of the parts const|tutes one b|||

Sec 179 kiqt of o/ders were different ports ore neqotioted Where
two or more parts of a set are negot|ated to d|fferent ho|ders |n due
course the ho|der whose t|t|e f|rst accrues |s as between such ho|ders
the true owner of the b||| 8ut noth|ng |n th|s sect|on affects the r|ght of a
person who |n due course accepts or pays the parts f|rst presented to
h|m

Sec 180 Liobi/ity of o/der wo indorses two or more ports of o set to

different persons Where the ho|der of a set |ndorses two or more parts
to d|fferent persons he |s ||ab|e on every such part and every |ndorser
subsequent to h|m |s ||ab|e on the part he has h|mse|f |ndorsed as |f such
parts were separate b|||s

Sec 181 4cceptonce of bi// drown in sets 1he acceptance may be wr|tten
on any part and |t must be wr|tten on one part on|y If the drawee accepts
more than one part and such accepted parts negot|ated to d|fferent
ho|ders |n due course he |s ||ab|e on every such part as |f |t were a
separate b|||

Sec 182 Poyment by occeptor of bi//s drown in sets When the acceptor
of a b||| drawn |n a set pays |t w|thout requ|r|ng the part bear|ng h|s
acceptance to be de||vered up to h|m and the part at matur|ty |s
outstand|ng |n the hands of a ho|der |n due course he |s ||ab|e to the
ho|der thereon

Sec 183 ffect of discorqinq one of o set Lxcept as here|n otherw|se

prov|ded where any one part of a b||| drawn |n a set |s d|scharged by
payment or otherw|se the who|e b||| |s d|scharged

kVI kCMISSCk NC1LS AND CnLCkS

Sec 184 Promissory note defined A negot|ab|e prom|ssory note w|th|n

the mean|ng of th|s Act |s an uncond|t|ona| prom|se |n wr|t|ng made by
one person to another s|gned by the maker engag|ng to pay on demand
or at a f|xed or determ|nab|e future t|me a sum certa|n |n money to order
or to bearer Where a note |s drawn to the makers own order |t |s not
comp|ete unt|| |ndorsed by h|m

Sec 18S ceck defined A check |s a b||| of exchange drawn on a bank

payab|e on demand Lxcept as here|n otherw|se prov|ded the prov|s|ons
of th|s Act app||cab|e to a b||| of exchange payab|e on demand app|y to a
check

Sec 186 Jitin wot time o ceck must be presented A check must be
presented for payment w|th|n a reasonab|e t|me after |ts |ssue or the
drawer w||| be d|scharged from ||ab|||ty thereon to the extent of the |oss
caused by the de|ay

Sec 187 certificotion of ceck effect of Where a check |s cert|f|ed by

the bank on wh|ch |t |s drawn the cert|f|cat|on |s equ|va|ent to an
acceptance

Sec 188 ffect were te o/der of ceck procures it to be certified

Where the ho|der of a check procures |t to be accepted or cert|f|ed the
drawer and a|| |ndorsers are d|scharged from ||ab|||ty thereon

Sec 189 Jen ceck operotes os on ossiqnment A check of |tse|f does

not operate as an ass|gnment of any part of the funds to the cred|t of the
drawer w|th the bank and the bank |s not ||ab|e to the ho|der un|ess and
unt|| |t accepts or cert|f|es the check

kVII GLNLkAL kCVISICNS

Sec 190 5ort tit/e 1h|s Act sha|| be known as the Negot|ab|e
Instruments Law

Sec 191 uefinition ond meoninq of terms In th|s Act un|ess the contract
otherw|se requ|res
4cceptonce means an acceptance comp|eted by de||very or not|f|cat|on

4ction |nc|udes counterc|a|m and setoff

8onk |nc|udes any person or assoc|at|on of persons carry|ng on the

bus|ness of bank|ng whether |ncorporated or not

8eorer means the person |n possess|on of a b||| or note wh|ch |s payab|e

to bearer

8i// means b||| of exchange and note means negot|ab|e prom|ssory

note

ue/ivery means transfer of possess|on actua| or construct|ve from one

person to another

no/der means the payee or |ndorsee of a b||| or note who |s |n

possess|on of |t or the bearer thereof

lndorsement means an |ndorsement comp|eted by de||very

lnstrument means negot|ab|e |nstrument

lssue means the f|rst de||very of the |nstrument comp|ete |n form to a

person who takes |t as a ho|der

Person |nc|udes a body of persons whether |ncorporated or not

vo/ue means va|uab|e cons|derat|on

Jritten |nc|udes pr|nted and writinq |nc|udes pr|nt

Sec 192 Persons primori/y /iob/e on instrument 1he
person primori/y ||ab|e on an |nstrument |s the person who by the terms
of the |nstrument |s abso|ute|y requ|red to pay the same A|| other part|es
are secondori/y ||ab|e

Sec 193 keosonob/e time wot constitutes In determ|n|ng what |s

a reosonob/e time regard |s to be had to the nature of the |nstrument
the usage of trade or bus|ness w|th respect to such |nstruments and the
facts of the part|cu|ar case

Sec 194 1ime ow computed wen /ost doy fo//s on o/idoy Where the
day or the |ast day for do|ng any act here|n requ|red or perm|tted to be
done fa||s on a Sunday or on a ho||day the act may be done on the next
succeed|ng secu|ar or bus|ness day

Sec 19S 4pp/icotion of 4ct 1he prov|s|ons of th|s Act do not app|y to
negot|ab|e |nstruments made and de||vered pr|or to the tak|ng effect
hereofchanrob|es |aw

Sec 196 coses not provided for in 4ct Any case not prov|ded for |n th|s
Act sha|| be governed by the prov|s|ons of ex|st|ng |eg|s|at|on or |n defau|t
thereof by the ru|es of the |aw merchant

Sec 197 kepeo/s A|| acts and |aws and parts thereof |ncons|stent w|th
th|s Act are hereby repea|ed

Sec 198 1ime wen 4ct tokes effect 1h|s Act sha|| take effect n|nety
days after |ts pub||cat|on |n the Cff|c|a| Gazette of the h|||pp|ne Is|ands
sha|| have been comp|eted

nocted Iebruary 3 1911