credit management-lesson 3 student pptx

7/26/2019 Credit Management-lesson 3 Student Pptx

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R E S E A R C H E D A N D P R E P A R E D B Y :

R O N A L Y N V . C A B A L L E R O , M B A

P R O F E S S O R

Credit ManagementNegotiabe !n"tr#mentSee$ted Pro%i"ion"


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!. Brie& Hi"tor'

Act No. 2031, the negotiable Instrument Law, tookeffect on June 1, 1911 an is !atterne after the ".#."niform Negotiable Instrument Law, which in turn

is co!ie from the $nglish %ill of $&change Act of1''2


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!!. Nat#re o& Negotiabe !n"tr#ment"

A. Definition

A negotiable instrument is awritten contractfor the!a(ment of mone( which b( its form an on its face

is intene as a substitute for moneyan !assesfrom han to han as mone(, so as to gi)e the holderin due course the right to hold the instrument ancollectthe sum for himself.


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B. Functions

1. To supplement the currency of the government;and

2. To substitute for money and increase thepurchasing medium



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C. Principal Features and Characteristics

1. Negotiability the right of transferees to holthe instrument an to collect the sum !a(able* an

2. Accumulation of secondary contract seconar( contracts are !icke u! an carriealong b( the instrument as it is negotiate from

!erson to !erson.



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D. Classes of Instrument

1. Principal Classes

a. Promissory Note, Bill of Exchane, and

Chec!

Neotia"le Promissory Note is an unconitional

!romise in writing b( one !erson to another signe b(the maker, engaging to !a( on eman or a fi&eeterminable future time, a sum certain in mone(, toorer or to bearer.



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Bill of Exchane + is an unconitional orer, inwriting aresse b( one !erson to another, signeb( the !erson gi)ing it, reuiring the !erson to whom

it is aresse to !a( on eman or at a fi&e oreterminable future time a sum certain in mone( toorer or to bearer.



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Chec! is a bill of e&change rawn on a bank !a(ableon eman. -hus, a check is a written oreraresse to a bank or !ersons carr(ing on the

business of banking, b( a !art( ha)ing mone( intheir hans, reuesting them to !a( on !resentment,to !erson name therein or to bearer of orer, aname sum of mone(.



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#ther Forms

a certificate of e!osit issue b( banks, !a(able to the

e!ositor or his orer, or to bearer*b trae acce!tance*

c bons, which are in the nature of !romissor( notes*

rafts which are bills of e&change rawn b( one

bank u!on another* ane letter of creit



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A. $e%uisites of Neotia"ility

1. #f a Neotia"le Instruments in &eneral

An instrument to be negotiable must conform to the followingreuirements/

1 it must be in writing an signe b( the maker or rawer*

2 it must contain an unconitional !romise or orer to !a( a sumcertain in mone(*

3 it must e !a(able on eman or a fi&e or eterminable futuretime

it must be !a(able to orer or to bearer

where the instrument is aresse to a rawee, he must be nameor otherwise inicate therein with reasonable certaint( #ec 1 NIL.

!!!. Form" ( !nter)retation o& Negotiabe !n"tr#ment"


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Mind E*er$i"e

hat is the test to

etermine whether aninstrument is negotiable

or not4


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An"+er

The test is whether or not the instrument containsall the requisites enumerated in ec 1 of the N!".

Among others# the instrument should contain words

or terms of negotiability which consists of theinstrument being so worded that it is payable tobearer $ or its variations% or that it is payable to theorder of a specified person# or made payable to him

or order


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'. #f a Promissory Note

the reuisites of a !romissor( note are/$a% it must be in writing and signed by the ma&er#

$b% it must contain an unconditional promise to paya sum certain in money;

$c% it must be payable on demand or a fi'ed ordeterminable future time;

$d% it must be payable to order or to bearer



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Mind E*er$i"e:5iscuss the negotiabilit( or non+negotiabilit( ofthe following notes/

6anila, 7hili!!ines

Januar( 2', 201

7h7 2,00.00

I !romise to !a( #hu Li or orer the sum of 7h7.2,00.00

#g

6o -ao


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Answer/

-he !romissor( note is negotiable since all thereuirements of #ection 1 of NIL are !resent. It issigne b( the maker, there is unconitional !romiseto !a(*

It is !a(able on eman, since no ate of maturit(a!!ears* an

It is !a(able to orer


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6anila, 7hili!!ines

Januar( 21, 201

7h7 10,000.00

8or )alue recei)e, I !romise to !a( John 5ee or orer the sumof 7h7 10,000.00 in fi)e installments, with the first installment!a(able on June 20, 201 an the other installments on or

before the fifth of the succeeing month thereafter.

#g.

Jackie Lee

Mind E*er$i"e:5iscuss the Negotiabilit( or non+negotiabilit( ofthe following notes/


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Answer

-he !romissor( note is also negotiable since all thereuirements of #ec 1, NIL are !resent

It is signe ( the maker,

-here is an unconitional !romise to !a(*It is !a(able at a etermine future time, that is June

20, 201 u! to on or before ctober, 20, 201* an

It is !a(able to orer


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(. #f a Bill of Exchane

-he reuisites of a bill of e&change are/

$1%it must be in writing an signe b( the rawer*

$2% it must contain an unconitional orer to !a( a sum certainin mone(*

$(%it must be !a(able on eman or at a fi&e or eterminable

future time*$)%it must be !a(able to orer or to bearer*

$*%the rawee must be name or otherwise inicate withreasonable certaint(.



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B. )eanin of Particular $e%uisites

1. *nconditional Promise or #rder

where the promise or order to pay is made todepend on a contingent event# it is conditional#and ma&es the instrument non+negotiable.



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. Certaint' o& S#m

the sum is certain if the amount is fi&e. -hecertaint( is howe)er not affecte although to be !ai

a with interest* b b( state installments * c b(state installment with acceleration in case of

efault* with e&change* f with costs ofcollection of attorne(:s fees.



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(. In )oney

;eneral ugment on efault

+ wai)es the benefit of law intene to !rotect to ebtor

+ allows the creitor the o!tion to reuire something in lieu ofmone(.



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+. Paya"le on Demand

an instrument is !a(able on emana where e&!resse to be !a(able on eman* atsight or on !resentation*

b where no !erio of !a(ment is state*

c where issue, acce!te or inorse aftermaturit(.



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-. Determinabe F#t#re ime

future time is eterminable in the following cases/

a at a fi&e !erio after ate of sight

b on or before a s!ecifie fi&e or eterminable futuretime*

c on or at a fi&e !erio after the occurrence of a s!ecifiee)ent, certain to ha!!en, although the e&act ate is notcertain.



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?. Pa'abe to Order

the instrument is !a(able to orer where rawn!a(able to the orer of a s!ecifie !erson, or to himor his orer



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/. Pa'abe to Bearer

an instrument is !a(able to bearer/ a whene&!resse to be so !a(able* b when !a(able to a!erson name therein or bearer* c when !a(able tothe orer of a fictitious or non+e&isting !erson, an

such fact was known to the rawer or maker* whenthe onl( an last enorsement is an enorsement in

blank.



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Probem i$0er

7erla bought a motor car !a(able in installmentsfrom Automoti)e @om!an( for 7h7 20,000.00.

#he mae a own !a(ment of 7h7 0,000.00 ane&ecute a !romissor( note for the balance. -hecom!an( the com!an( subseuentl( inorse thenote to


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Probem i$0er $ontin#ation

8or )alue recei)e, I !romise to !a( Automoti)e @om!an( ororer at its office in 6akati @it(, the sum of 7h7 200,000.00

with interest at twel)e 12 !ercent !er annum, !a(able ineual installments of 7h7 20,000.00 monthl( for ten 10

months starting 8ebruar( 01, 201.6anila, Januar( 02, 201.

sg 7erla

7a( to the orer of


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Probem i$0er $ontin#ation

%ecause 7erla efaulte in the !a(ment of herinstallments,

credit management-lesson 3 student pptx

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