Negotiable Instruments Flashcards

Flashcards based on lecture notes about negotiable instruments.

What is the U.S. Uniform Commercial Code (UCC)?

A standardized set of regulations for conducting business and financial transactions in any state in the U.S.

When was Act No. 2031 enacted in the Philippines?

February 3, 1911

What is the purpose and application of Act No. 2031?

To facilitate transactions in commercial paper and promote the free flow of credit.

According to Section 196 (Default Rule) of Act 2031, what governs any case not specifically provided for by the Act?

Existing legislation or, in default thereof, by the rules of merchant.

In what way are negotiable instruments a substitute for money?

They are widely used in commerce to take the place of money, and their negotiability allows them to pass freely, often free from personal defenses against prior owners.

How do negotiable instruments serve as a medium of exchange for commercial transactions?

Negotiable instruments, especially checks, are the primary media of exchange for most business transactions, increasing the purchasing medium in circulation and facilitating economic prosperity.

What are some examples of defects in previous ownership or title from which a holder in due course can collect the amount payable free from?

Fraud, breach of contract, etc.

What are some examples of real defenses to which a bona fide holder is still subject?

Forgery, fraud in the execution, etc.

What is the legal effect of the theory that possession implies ownership of negotiable instruments?

The maker is estopped from claiming defects in title against a bona fide holder.

What is a promissory note?

Promise by the issuer to pay.

What is a Bill of Exchange?

Order by the issuer for a third party to pay.

Why do courts resolve doubt in favor of negotiability when the meaning of an instrument is unclear?

To support the free and secure circulation of negotiable instruments; they are essential tools in commercial transactions, both locally and globally.

What is the nature of Negotiable Instruments?

A special kind of contract with negotiability.

What are some examples of Negotiable Instruments?

Checks, promissory notes, bills of exchange

What is a Document of Title?

Receipt or order for delivery of goods.

What is a Trust Receipt?

Security document after goods are released by a bank.

What is a Certificate of Stock?

Title to a share in a corporation.

What is a Pawn Ticket?

Evidence of pledge, not a negotiable instrument, Governed by Civil Code