Chapter V - LIABILITIES OF PARTIES

Created by Drumbeater79 

Upgrade to
remove ads

15 terms

Parties primarily liable:

Parties primarily liable:

• Maker of promissory note.
• Acceptor of bill of exchange.
• Certifier of a check.

Liabilities:
• Unconditionally liable;
• Duty bound to pay the holder at date of maturity, WON holder demands payment from him, and he is not relieved from liability even if the instrument should become overdue due to failure of holder to make such demand.

• Person primarily liable: person who by the terms of the instrument is absolutely required to pay the same.

• Presentment for payment not necessary to charge primary party.

Liability of the Maker: (Sec. 60 NIL)
Warranties of a maker: TPC

Liability of the Maker: (Sec. 60 NIL)
Warranties of a Maker: TPC

i. He will pay the PN according to its TENOR;

ii. He admits the existence of the PAYEE;

iii. He admits that the payee has the CAPACITY to indorse.

Liability of the Acceptor: (Sec. 62 NIL)
Warranties of the Acceptor: ADGC/AC

Liability of the Acceptor: (Sec. 62 NIL)
Warranties of the Acceptor: ADGC/AC

i. He will pay the bill according to the tenor of his ACCEPTANCE;

ii. He admits the existence of the DRAWER;

iii. He admits that the signature of the drawer is GENUINE;

iv. He admits the CAPACITY of the drawer;

v. He admits that the drawer has the AUTHORITY to draw the instrument; and

vi. He admits the existence of the payee and his CAPACITY to indorse.

Parties secondarily liable:

Parties secondarily liable:

• Drawer of a bill.
• Indorsers both note and bill.

Liabilities:
• Conditionally liable.

• Not bound to pay unless the following has been
fulfilled: DDT
1. Due presentment or demand from primary party for payment or acceptance;

2. Dishonor by such party; and

3. Taking of proceedings required by law after dishonor.

Liability of Drawer: (Sec. 61 NIL)
Warranties of the Drawer: CDP

Liability of Drawer: (Sec. 61 NIL)
Warranties of the Drawer: CDP

i. He admits the existence of the payee and his then CAPACITY to indorse;

ii. He engages that, on DUE presentment, the bill will be accepted or paid, or both, according to its tenor.

iii. That if it is dishonored by non-acceptance or non-payment, he will PAY to the holder of the bill or to any subsequent indorser who was compelled to pay it, provided the necessary
proceedings on dishonor were duly taken.

To fix the liability of the Drawer, the ff. steps must be
taken: DDT

To fix the liability of the Drawer, the ff. steps must be
taken: DDT

1. DUE presentment or demand from primary party for payment or acceptance;

2. DISHONOR by such party; and

3. TAKING of proceedings required by law after dishonor.

When a person deemed Indorser: (Sec. 63 NIL)

When a person deemed Indorser: (Sec. 63 NIL)

• A person who signs an instrument not as maker, drawer or acceptor is deemed to have signed as an Indorser.

• If it is not clear in what capacity a person signed the instrument, he is deemed to be an Indorser.

Liability of Irregular Indorser: (Sec. 64 NIL)
Requisites to be an Irregular Indorser: PSB

Liability of Irregular Indorser: (Sec. 64 NIL)
Requisites to be an Irregular Indorser: PSB

a. He is not otherwise a PARTY to the instrument;

b. He signs the instrument in BLANK; and

c. He signs BEFORE delivery of the instrument; otherwise, if after delivery, this section will not apply.

Cases regarding the liability of an Irregular Indorser:

Cases regarding the liability of an Irregular Indorser:

1. Instrument payable to the order of a third person - he is liable to the payee and to all subsequent parties.

2. Instrument payable to the order of maker or drawer or is payable to bearer - he is liable to all parties subsequent to the maker or drawer.

3. If he signs for the accommodation of payee - he is liable to all parties subsequent to the payee.

Qualified Indorsement/Negotiation by delivery:
(Sec. 65 NIL)
Warranties of a Qualified Indorser/Negotiation by
delivery: GGCN

Qualified Indorsement/Negotiation by delivery:
(Sec. 65 NIL)
Warranties of a Qualified Indorser/Negotiation by
delivery: GGCN

i. The instrument is GENUINE and in all respect what it purports to be;

ii. The indorser has GOOD title to it;

iii. All prior parties had the CAPACITY to contract;

iv. Indorser has NO knowledge of any fact that would impair the validity or the value of the instrument.

Liability of a General/Unqualified Indorser:
(Sec. 66 NIL)
Warranties of a General Indorser: GGCV

Liability of a General/Unqualified Indorser:
(Sec. 66 NIL)
Warranties of a General Indorser: GGCV

i. The instrument is GENUINE and in all respect what it purports to be;

ii. The indorser has GOOD title to it;

iii. All prior parties had the CAPACITY to contract;

iv. That is VALID and subsisting.

In addition: DP

• Engages that the instrument will be accepted or paid or both according to its tenor on DUE presentment.

• Engages to PAY the amount thereof if it be dishonored and the necessary proceedings on dishonor are taken.

To fix the liability of a General Indorser, the ff. steps
must be taken: DDT

To fix the liability of a General Indorser, the ff. steps
must be taken: DDT

1. DUE presentment or demand from primary party for payment or acceptance;

2. DISHONOR by such party; and

3. TAKING of proceedings required by law after dishonor.

Order of liability AMONG Indorsers: (Sec. 68 NIL)

Order of liability AMONG Indorsers: (Sec. 68 NIL)

The presumption is that Indorsers are liable in the order in which they indorse; unless it is shown otherwise by parol evidence.

Order of liability AMONG Indorsers: (Sec. 68 NIL)
Effects to the holder:

To the holder:

• As far as the holder is concerned, he can go against any indorser in any order.

Liability of an Agent or Broker: (Sec. 69 NIL)

Liability of an Agent or Broker: (Sec. 69 NIL)

This section refers to an instrument payable to bearer and negotiated by mere delivery by an agent or broker.

• He is personally liable in the manner of an indorser who negotiated the instrument by mere delivery if he DID NOT DISCLOSED the name of the principal and the fact that he is only an agent.

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

NEW! Voice Recording

Click the mic to start.

Create Set