Negotin Study Guide 2
Presentment for Payment
Presentment for payment is not necessary in order to charge the person secondarily liable (Drawer and
indorsers (Sec 70). Sometimes presentment is excused (Sec 82)
Presentment for Payment is sufficient when made (Sec 72):
1. By the holder or his agent
2. at a reasonable hour on a business day on the due date or within a reasonable time after its issue if
payable on demand (Sec 71). If due date falls on a Sunday or a holiday, presentment for payment must
be made on the next succeeding business day. If payable on demand, presentment can also be made
before twelve noon on Saturday if not a holiday (Sec 85). In computing days/time, exclude the first
day and include the last day (Sec 86).
3. at the proper place: place fixed, address of payor, usual place of business or residence, wherever he
can be found and in a bank during banking hours (Sec 73, 75, 87).
4. To the person primarily liable or agent (76, 77, 78).
5. Instrument must be physically exhibited and delivered (Sec 74)
Payment is in due course when paid on the due date to the holder in good faith and without notice of
defective title (Sec 88). When payment is dishonored, there is an immediate right of recourse against
all parties secondarily liable (SEC 84). Instrument is dishonored when payment is refused or where the
instrument is overdue and remains unpaid. (Sec 83).
Presentment for Acceptance
Presentment for acceptance must be made: (Sec 143)
1. where bill is payable after sight OR necessary to fix maturity
2. where expressly stipulated
3. Bill is drawn payable elsewhere
Presentment for acceptance is sufficient when made: (Sec 145)
1. by the holder or his agent
2. at a reasonable hour on a business day and before twelve noon on Saturday if not a holiday (Sec
146). If the holder fails to do so, the drawer and all indorsers are discharged (Sec 144).
3. to the drawee or his agent. If there are 2 or more drawees who are not partners, presentment must
be made to all. If drawee is dead, to his agent. If drawee is insolvent, to his trustee.
Presentment for acceptance is excused and the bill may be treated as dishonored by non-acceptance
where the drawee is dead, where presentment cannot be made after reasonable diligence and, where
acceptance is refused. (Sec 148). Sometimes, delay in presentment may be excused where the drawee
has no sufficient time and the drawer and indorsers are not discharged. (Sec 147)
A bill is dishonored by non-acceptance if acceptance is refused or cannot be obtained or when
presentment is excused and still the bill is not accepted (Sec 149). An immediate right of resource
against the drawer and indorsers accrues to the holder and no presentment for payment is necessary
(Sec 151).
Requisites of Acceptance
1. Acceptance signifies the drawee's assent to the order of the drawer (Sec 132)
2. Acceptance must be in writing and assigned by the drawee (Sec 132)
3. Acceptance must be on the face of the bill or separate instrument called allonge (Sec 133/134). An
unconditional promise in writing to accep a bill is deemed an actual acceptance when received for
value (Sec 135). An incomplete bill may be accepted (Sec 138).
4. Acceptance is either general or qualified (Sec 139, 140, 141)
5. Drawer has 24 hours from presentment to accept the bill or not. (Sec 136). If drawee destroys the
bill or refuses to return within 24 hours, he will be deemed to have accepted it (Sec 137). If drawee
refuses to accept or return the bill despite demand by the holder, the holder must treat the bill as
dishonored (Sec 150).
Notice of dishonor
Form of notice (Sec 95, Sec 96)
1. Written but need not be signed
2. Oral
By whom given (Sec 90, 91, 92, 93, 94)
holder or his agent or by any party who might be compelled to pay it to the holder. Notice given by or
on behalf of the holder inures to the benefit of all subsequent holders and all prior parties who have a
right of recourse against the party to whom notice is given.
To whom notice must be given ( Sec 89, 98, 99, 100, 101)
To the drawer and each indorser, otherwise discharged.
Notice where party is dead – to his representative
Notice to partners -to any one
Notice to joint persons not partners – to each of them
Notice to bankrupt – party himself or Trustee
Time and place within which notice must be given
As soon as the instrument is dishonored unless delay is excused (Sec 113) or notice is not required such
as when the drawer and drawee refer to one person, drawee is fictitious or drawer has countermanded
payment (Sec 114, 115), or notice is dispensed with when after reasonable diligence it cannot be given
(Sec 112)
Where the parties reside in same place, notice must be given before the close of business hours on the
day following the day of dishonor or before the usual hours of rest on the day following, or deposited in
the post office in time to reach him in the usual course on the day following. (Sec 103)
Where parties reside in different places, notice must be deposited in the post office in time to go by
mail the day following or within the time that notice would have been received in due course of mail.
(Sec 104, 105, 106, 107, 108)
Where notice of dishonor by non-acceptance has been given, notice of a subsequent dishonor by non-
payment is not necessary. (Sec 116) Notice of dishonor may be waived and placed in the instrument
itself or above the indorser's signature (Sec 109, I10)
DISCHARGE of Negotiable Instruments
Methods of discharge of negotiable instruments (Sec 119)
a) payment by or on behalf of the principal debtor
b) payment by the accommodated party
c) intentional cancellation of the instrument
d) modes of discharge of a simple contract
e) merger of debtor and holder
Discharge of persons secondarily liable (Sec 120)
a) any act which discharges the innstrument (Sec 119)
b) intentional cancellation of his signature by holder (see also Sec 123)
c) Discharge of prior party (see also Sec 121)
d) Valid tender of payment by a prior party
e) release of the Principal debtor (See also Sec 122)
f) Extension of time of payment
NOTE: Protest, payment for honor and acceptance for honor, bills in set are not included.