Quiz No. 3

The acceptor, by accepting the instrument admits the following, except the:

• existence of the payee

• capacity of the payee to indorse

• genuineness of the drawer's signature

• right of the holder to enforce payment of the instrument

Which of the following defenses may a party to an instrument avail himself of against any holder?

• Want of delivery of incomplete instrument

• Want of authority to complete an instrument that was delivered

• Want of delivery of complete instrument

• Want or absence of consideration

M makes a promissory note payable to the order of P for PHP10,000.00. After delivery to P, P changed the amount to US$10,000.00. Thereafter, P indorsed the note to A, A to B, B to C, C to D and D to H. The parties subsequent to P were not aware of the alteration made by P. Based on the foregoing facts, which of the following statements is incorrect?

• H can hold M liable for US$10,000.00 if H is a holder in due course

• H can hold M liable for PHP10,000.00 if H is a holder in due course

• H cannot hold M liable for any amount if H is not a holder in due course

• H can hold A, B, C and D liable for US$10,000.00 even if H is not a holder in due course.

The maker, by making the instrument, has the following liabilities, except:

• the engagement to pay the instrument according to its tenor

• the admission of the existence of the payee

• the admission of the capacity of the payee to indorse the instrument

• the admission of the right of the holder to enforce payment of the instrument

M makes a promissory note payable to the order of P and delivers the same to P. P indorses the note to A who keeps it in his drawer. F steals the note and negotiates the same to B by forging A's signature. Thereafter, B negotiates the note to C, C to D and D to H, a holder in due course. Based on the foregoing information, which of the following statements is true?

• H can hold M and P liable because they became bound under the instrument before the forgery

• H cannot hold B, C and D liable because they have no participation whatsoever in the commission of the forgery

• H can enforce the instrument only against F, the forger, since he is the perpetrator of the forgery

• H can enforce the instrument against F, B, C and D but not against M, P and A

P executes a promissory note for P50,000.00 indicating therein that the maker is M and that it is payable to the order of P. Thereafter he forges the signature of M and indorses the note to A, A to B, B to C, and C to H, holder. Based on the foregoing facts, which of the following statement is incorrect?

• H can collect from M if H is a holder in due course

• H cannot collect from M whether H is a holder in due course or not

• H can collect from A, B or C whether H is a holder in due course or not

• H can collect from P whether H is a holder in due course or not

M issued a promissory note payable to the order of P for P20,000.00. Thereafter, P indorsed the note to A. While the note was in the possession of A, F stole it and negotiated it to B by forging the signature of A. B was not aware of the forgery of A's signature. B then indorsed the note to H, a holder in due course. The parties who may raise forgery as a defense are:

• A and B

• M and P

• M, P and A

• None of the parties may raise forgery as a defense because H is a holder in due course

M issued a promissory note payable to P or bearer for P40,000.00. Thereafter, P indorsed the note to A. While the note was in the possession of A, F stole it and negotiated it to B by forging the signature of A. B was not aware of the forgery of A's signature. B then indorsed the note to H, a holder in due course. The parties who may raise forgery as a defense are:

• A and B

• M and P

• M, P and A

• None of the parties may raise the defense of forgery

R drew a check against his account with W Bank payable to the order of P for P20,000.00. F stole the check, forged P's signature, and deposited the check in his account with C bank. After clearing it, F withdrew the amount of the check and fled. Who among the following will shoulder the loss?

• R

• P

• W Bank

• C Bank

Which of the following is a real defense?

• Illegality of contract expressly so declared in a statute

• Illegality of the contract because it was issued for unlawful consideration

• Renunciation before maturity

• Fraud in inducement