Sec. 1 Form of negotiable instruments. — An Sec. 4. Determinable future time; what constitutes.

—
instrument to be negotiable must conform to the An instrument is payable at a determinable future
following requirements: time, within the meaning of this Act, which is
expressed to be payable —
(a) It must be in writing and signed by the maker or
drawer; (a) At a fixed period after date or sight; or

(b) Must contain an unconditional promise or order to (b) On or before a fixed or determinable future time
pay a sum certain in money; specified therein; or

(c) Must be payable on demand, or at a fixed or (c) On or at a fixed period after the occurrence of a
determinable future time; specified event, which is certain to happen, though
the time of happening be uncertain.
(d) Must be payable to order or to bearer; and
An instrument payable upon a contingency is not
(e) Where the instrument is addressed to a drawee, negotiable, and the happening of the event does not
he must be named or otherwise indicated therein with cure the defect.
reasonable certainty.
Sec. 5. Additional provisions not affecting
Sec. 2. Certainty as to sum; what constitutes. — The negotiability. — An instrument which contains an
sum payable is a sum certain within the meaning of order or promise to do any act in addition to the
this Act, although it is to be paid — payment of money is not negotiable. But the
negotiable character of an instrument otherwise
(a) With interest; or
negotiable is not affected by a provision which
(b) By stated installments; or
(a) Authorizes the sale of collateral securities in case
(c) By stated installments, with a provision that upon the instrument be not paid at maturity; or
default in payment of any installment or of interest the
(b) Authorizes a confession of judgment if the
whole shall become due; or
instrument be not paid at maturity; or
(d) With exchange, whether at a fixed rate or at the
(c) Waives the benefit of any law intended for the
current rate; or
advantage or protection of the obligor; or
(e) With costs of collection or an attorney's fee, in
(d) Gives the holder an election to require something
case payment shall not be made at maturity.
to be done in lieu of payment of money.
Sec. 3. When promise is unconditional. — An
But nothing in this section shall validate any provision
unqualified order or promise to pay is unconditional
or stipulation otherwise illegal.
within the meaning of this Act, though coupled with —
Sec. 6. Omissions; seal; particular money. — The
(a) An indication of a particular fund out of which
validity and negotiable character of an instrument are
reimbursement is to be made, or a particular account
not affected by the fact that —
to be debited With the amount; or
(a) It is not dated; or
(b) A statement of the transaction which gives rise to
the instrument. But an order or promise to pay out of (b) Does not specify the value given, or that any value
a particular fund is not unconditional. has been given therefor; or
(c) Does not specify the place where it is drawn or the (b) When it is payable to a person named therein or
place where it is payable; or bearer; or

(d) Bears a seal; or (c) When it is payable to the order of a fictitious or

non-existing person, and such fact was known to the
(e) Designates particular kind of current money in person making it so payable; or
which payment is to be made.
(d) When the name of the payee does not purport to
But nothing in this section shall alter or repeal any be the name of any person; or
statue requiring in certain cases the nature of the
consideration to be stated in the instrument. (e) When the only or last indorsement is an
indorsement in blank
Sec. 7. When payable on demand. —An instrument is
payable on demand — Sec. 12. Ante-dated and post-dated. — The
Instrument is not invalid for the reason only that it is
(a) Where it is expressed to be payable on demand, ante-dated or post-dated, provided this is not done for
or at sight, or on presentation; or an illegal or fraudulent purpose. The person to whom
an instrument so dated is delivered acquires the title
(b) In which no time for payment is expressed.
thereto as of the date of delivery.
Where an instrument is issued, accepted, or indorsed
Sec. 13. When date may be inserted. — Where an
when overdue, it is, as regards the person so issuing,
instrument expressed to be payable at a fixed period
accepting, or indorsing it, payable on demand.
after date is issued undated, or where the acceptance
Sec. 8. When payable to order. —The instrument is of an instrument payable at a fixed period after sight
payable to order where it is drawn payable to the is undated, any holder may insert therein the true date
order of a specified person or to him or his order. It of issue or acceptance, and the instrument shall be
may be drawn payable to the order of— payable accordingly. The insertion of a wrong date
does not avoid the instrument in the hands of a
(a) A payee who is not maker, drawer, or drawee; or subsequent holder in due course; but as to, him, the
date so inserted is to be regarded as the true date.
(b) The drawer or maker; or
Sec. 14. Blanks, when may be filled. — Where the
(c) The drawee; or
instrument is wanting in any material particular, the
(d) Two or more payees jointly; or person in possession thereof has a prima facie
authority to complete it by filling up the blanks therein.
(e) One or more several payees; or And a signature on a blank paper delivered by the
person making the signature in order that the paper
(f) The holder of an office for the time being.
may be converted into a negotiable instrument
Where the instrument is payable to order the payee operates as a prima facie authority to fill it up as such
must be named or otherwise indicated therein with for any amount. In order, however, that any such
reasonable certainty. instrument when completed may be enforced against
any person who became a party thereto prior to its
Sec. 9. When payable to bearer. — The instrument is completion, it must be filled up strictly in accordance
payable to bearer — with the authority given and within a reasonable time.
But if any such instrument, after completion, is
(a) When it is expressed to be so payable; or
negotiated to a holder in due course, it is valid and
effectual for all purposes in his hands, and he may against whom it is sought to enforce such right is
enforce it as if it had been filled up strictly in precluded from setting up the forgery or want of
accordance with the authority given and within a authority.
reasonable time.
Sec. 29. Liability of accommodation party. — An
Sec. 15. Incomplete instrument not delivered. — accommodation party is one who has signed the
Where an incomplete instrument has not been instrument as maker, drawer, acceptor, or indorser,
delivered it will not, if completed and negotiated, without receiving value therefor, and for the purpose
without authority, be a valid contract in the hands of of lending his name to some other person. Such a
any holder, as against any person whose signature person is liable on the instrument to a holder for
was placed thereon before delivery. value, notwithstanding such holder at the time of
taking the instrument knew him to be only an
Sec. 16. Delivery; when effectual; when presumed. — accommodation party.
Every contract on a negotiable instrument is
incomplete and revocable until delivery of the Sec. 30. What constitutes negotiation. — An
instrument for the purpose of giving effect thereto. As instrument is negotiated when it is transferred from
between immediate parties, and as regards a remote one person to another in such manner as to constitute
party other than a holder in due course, the delivery in the transferee the holder thereof. If payable to bearer,
order to be effectual, must be made either by or under it is negotiated by delivery; if payable to order, it is
the authority of the party making, drawing, accepting, negotiated by the indorsement of the holder
or indorsing as the case may be; and in such case the completed by delivery.
delivery may be shown to have been conditional, or
for a special purpose only, and not for the purpose of Sec. 31. Indorsement; how made. — The
transferring the property in the instrument. But where indorsement must be written on the instrument itself
the instrument is in the hands of a holder in due or upon a paper attached thereto. The signature of
course, a valid delivery thereof by all parties prior to the indorser, without additional words, is a sufficient
him so as to make them liable to him is conclusively indorsement
presumed. And where the instrument is no longer in Sec. 32. Indorsement must be of entire Instrument. —
the possession of a party whose signature appears The indorsement must be an indorsement of the
thereon, a valid and intentional delivery by him is entire instrument an indorsement which purports to
presumed until the contrary is proved. transfer to the indorsee a part only of the amount
Sec. 22. Effect of indorsement by infant or payable, or which purports to transfer the instrument
corporation. — The indorsement or assignment of the to two or more indorsees severally, does not operate
instrument by a corporation or by an infant passes the as a negotiation of the instrument. But where the
property therein, notwithstanding that from want of instrument has been paid in part, it may be indorsed
capacity the corporation or infant may incur no liability as to the residue.
thereon. Sec. 33. Kinds of indorsement. —An indorsement
Sec. 23. Forged signature; effect of.—When a may be either special or in blank; and it may also be
signature is forged or made without authority of the either restrictive or qualified, or conditional.
person whose signature it purports to be, it is wholly Sec. 34. Special indorsement; indorsement in blank.
inoperative, and no right to retain the instrument, or to — A special indorsement specifies the person to
give a discharge therefor, or to enforce payment whom, or to whose order, the instrument is to be
thereof against any party thereto, can be acquired payable; and the indorsement of such indorsee is
through or under such signature, unless the party
necessary to the further negotiation of the instrument. indorsement does not impair the negotiable character
An indorsement in blank specifies no indorsee, and of the instrument.
an instrument so indorsed is payable to bearer, and
may be negotiated by delivery. Sec. 39. Conditional indorsement—Where an
indorsement is conditional, a party required to pay the
Sec. 35. Blank Indorsement; how changed to special instrument may disregard the condition and make
indorsement. — The holder may convert a blank payment to the indorsee or his transferee whether the
indorsement into a special indorsement by writing condition has been fulfilled or not. But any person, to
over the signature of the indorser in blank any whom an instrument so indorsed is negotiated, will
contract consistent with the character of the hold the same, or the proceeds thereof, subject to the
indorsement. rights of the person indorsing conditionally.

Sec. 36. When indorsement restrictive. —An Sec. 40. Indorsement of instrument payable to bearer.
indorsement is restrictive which either — — Where an instrument, payable to bearer, is
indorsed specially, it may nevertheless be further
(a) Prohibits the further negotiation of the instrument; negotiated by delivery; but the person indorsing
or specially is liable as indorser to only such holders as
make title through his indorsement.
(b) Constitutes the indorsee the agent of the indorser;
or Sec. 49. Transfer without indorsement; effect of. —
Where the holder of an instrument payable to his
(c) Vests the title in the indorsee in trust for or to the
order transfers it for value without indorsing it, the
use of some other person.
transfer vests in the transferee such title as the
But the mere absence of words implying power to transferor had therein, and the transferee acquires, in
negotiate does not make an indorsement restrictive. addition, the right to have the indorsement of the
transferor. But for the purpose of determining whether
Sec. 37. Effect of restrictive indorsement; rights of the transferee is a holder in due course, the
indorsee. —A restrictive indorsement confers upon negotiation takes effect as to the time when the
the indorsee the right — indorsement is actually made.
(a) To receive payment of the instrument; Sec. 52. What constitutes a holder in due course. —
A holder in due course is a holder who has taken the
(b) To bring any action thereon that the indorser could
instrument under the following conditions:
bring;
(a) That it is complete and regular upon its face;
(c) To transfer his rights as such indorsee, where the
form of the indorsement authorizes him to do so. (b) That he became the holder of it before it was
overdue, and without notice that it had been
But all subsequent indorsees acquire only the title of
previously dishonored, if such was the fact;
the first indorsee under the restrictive indorsement.
(c) That he took it in good faith and for value;
Sec. 38. Qualified indorsement. —A qualified
indorsement constitutes the indorser a mere assignor (d) That at the time it was negotiated to him he had no
of the title to the instrument. It may be made by notice of any infirmity in the instrument or defect in the
adding to the indorsees signature the words "without title of the person negotiating it.
recourse" or any words of similar import. Such an
Sec. 53. Where person not deemed holder In due bound on the instrument prior to the acquisition of
course. — Where an instrument payable on demand such defective title.
is negotiated an unreasonable length of time after its
issue, the holder is not deemed a holder in due Sec. 60. Liability of maker.—The maker of a
course. negotiable instrument by making it engages that he
will pay it according to its tenor, and admits the
Sec. 57. Rights of holder in due course. — A holder in existence of the payee and his then capacity to
due course holds the instrument free from any defect indorse.
of title of prior parties and free from defenses
available to prior parties among themselves, and may Sec. 61. Liability of drawer. — The drawer by drawing
enforce payment of the instrument for the full amount the instrument admits the existence of the payee and
thereof against all parties liable thereon. his then capacity to indorse; and engages that on due
presentment the instrument will be accepted or paid,
(1) He may sue on the instrument in his own name or both, according to its tenor, and that if it be
(Sec. 51.); dishonored, and the necessary proceedings on
dishonor be duly taken, he will pay the amount thereof
(2) He may receive payment and if the payment is in to the holder, or to any subsequent indorser who may
due course, the instrument is discharged (ibid.)} be compelled to pay it. But the drawer may insert in
the instrument an express stipulation negativing or
(3) He holds the instrument free from any defect of
limiting his own liability to the holder.
title of prior parties;
Sec. 62. Liability of acceptor. — The acceptor by
(4) He holds the instrument free from defenses
accepting the instrument engages that he will pay it
available to prior parties among themselves; and
according to the tenor of his acceptance; and admits
(5) He may enforce payment of the instrument for the —
full amount thereof against all parties liable thereon,
(a) The existence of the drawer, the genuineness of
(see Sec. 54.)
his signature, and his capacity and authority to draw
Sec. 58. When subject to original defenses. —in the the instrument; and
hands of any holder other than a holder in due
(b) The existence of the payee and his then capacity
course, a negotiable instrument is subject to the same
defenses as if it were non-negotiable. But a holder to indorse.
who derives his title through a holder in due course, Sec. 63. When person deemed indorser. — A person
and who is not himself a party to any fraud or illegally placing his signature upon an instrument otherwise
affecting the instrument, has all the rights of such than as maker, drawer or acceptor is deemed to be
former holder in respect of all parties prior to the an indorser, unless he clearly indicates by appropriate
latter. words his intention to be bound in some other
capacity.
Sec. 59. Who is deemed holder in due course. —
Every holder is deemed prima facie to be a holder in Sec. 64. Liability of Irregular Indorser. — Where a
due course; but when it is shown that the title of any person, not otherwise a party to an instrument, places
person who has negotiated the instrument was thereon his signature in blank before delivery, he is
defective, the burden is on the holder to prove that he liable as indorser, in accordance with the following
or some person under whom he claims acquired the rules:
title as holder in due course. But the last mentioned
rules do not apply in favor of a party who became
(a) If the instrument is payable to the order of a third dishonor be duly taken, he will pay the amount thereof
person, he is liable to the payee and to all subsequent to the holder, or to any subsequent indorser who may
parties. be compelled to pay it.

(b) If the instrument is payable to the order of the Sec. 67. Liability of indorser where paper negotiable
maker or drawer, or is payable to bearer, he is liable by delivery. — Where a person places his
to all parties subsequent to the maker or drawer. indorsement on an instrument negotiable by delivery
he incurs all the liabilities of an indorser.
(c) If he signs for the accommodation of the payee, he
is liable to all parties subsequent to the payee. Sec. 69. Liability of an agent or broker. — Where a
broker or other agent negotiates an instrument
Sec. 65. Warranty where negotiation by delivery, and without indorsement, he incurs all the liabilities
so forth. — Every person negotiating an instrument by prescribed by section sixty-five of this Act, unless he
delivery or by a qualified indorsement warrants — discloses the name of his principal and the fact that
he is acting only as agent.
(a) That the instrument is genuine and in all respects
what it purports to be; Sec. 124. Alteration of instrument; effect of. — Where
a negotiable instrument is materially altered without
(b) That he has a good title to it;
the assent of all parties liable thereon, it is avoided,
(c) That all prior parties had capacity to contract; except as against a party who has himself made,
authorized, or assented to the alteration and
d) That he has no knowledge of any fact which would subsequent indorsers. But when an instrument has
impair the validity of the instrument or render it been materially altered and is in the hands of a holder
valueless. in due course, not a party to the alteration, he may
enforce payment thereof according to its original
But when the negotiation is by delivery only, the
tenor.
warranty extends in favor of no holder other than the
immediate transferee. Sec. 126. Bill of exchange defined. — A bill of
exchange is an unconditional order in writing
The provisions of subdivision (c) of this section do not
addressed by one person to another, signed by the
apply to persons negotiating public or corporation
person giving it, requiring the person to whom it is
securities, other than bills and notes.
addressed to pay on demand or at a fixed or
Sec. 66. Liability of general indorser. — Every determinable future time a sum certain in money to
indorser who indorses without qualification warrants order or to bearer.
to all subsequent holders in due course —
Sec. 127. Bill not an assignment of funds in hands of
(a) The matters and things mentioned in subdivisions drawee. —A bill of itself does not operate as an
(a), (b) and (c) of the next preceding section; and assignment of the funds in the hands of the drawee
available for the payment thereof, and the drawee is
(b) that the instrument is at the time of his not liable on the bill unless and until he accepts the
indorsement, valid and subsisting. same.

And, in addition, he engages that on due Sec. 184. Promissory note defined. — A negotiable
presentment, it shall be accepted or paid, or both, as promissory note within the meaning of this Act is an
the case may be, according to its tenor, and that if it unconditional promise in writing made by one person
be dishonored, and the necessary proceedings on to another, signed by the maker, engaging to pay on
demand, or at a fixed or determinable future time, a
sum certain in money to order or to bearer. Where a
note is drawn to the maker's own order, it is not
complete until indorsed by him.

Sec. 185. Check defined. —A check is a bill of

exchange drawn on a bank payable on demand.
Except as herein otherwise provided, the provisions of
this Act applicable to a bill of exchange payable on
demand apply to a check.

Sec. 191. Definitions and meaning of terms. — In this

Act, unless the context otherwise requires —

"Acceptance" means an acceptance completed by

delivery or notification;

"Action" includes counterclaim and set-off;

"Bank" includes any person or association of persons

carrying on the business of banking, whether
incorporated or not;

"Bearer" means the person in possession of a bill or

note which is payable to bearer;

"Bill" means bill of exchange, and "note" means

negotiable promissory note;

"Delivery" means transfer of possession, actual or

constructive, from one person to another;

"Holder" means the payee or indorsee of a bill or

note, who is in possession of it, or the bearer thereof;

"Indorsement" means an indorsement completed by

delivery;

"Instrument" means negotiable instrument;

"Issue" means the first delivery of the instrument,

complete in form, to a person who takes it as a
holder;

"Person" includes a body of persons, whether

incorporated or not;