Sir: What is a negotiable instrument?

It is an instrument which conforms to the requirements of negotiability

under Section 2 of the NIL which states that:
a. It must be in writing and signed by the maker or the drawer;
b. Must contain an unconditional promise or order to pay a sum certain
in money;
c. Must be payable on demand, or at a fixed or determinable future
time;
d. Must be payable to order or to bearer; and
e. Where the instrument is addressed to a drawee, he must be named
or otherwise indicated therein with reasonable certainty.
Sir: What is the second requirement?
The second requirement is that the instrument must contain an
unconditional promise or order to pay a sum certain in money.
Example:
To: M
Pay to X or order P1,000,000 and reimburse yourself from
my monthly salary.
Sgd.
__________
Sir: Does the example comply with the second requirement? Is there a
condition imposed in this example?
There is a condition imposed but it is not on the order to pay but on the
reimbursement. The condition is after M pays X, he will reimburse
himself from the monthly salary. The condition is the existence of the
monthly salary. But the existence or at least the sufficiency of the
monthly salary is not conditioned upon the payment but is conditioned
upon the reimbursement. Yes, he can reimburse himself but if there is
no monthly salary then there could be no reimbursement.
The law deems this as still an unconditional order because while there
is a condition imposed, the condition is imposed not on the obligation
to pay because regardless of whether there is a monthly salary or not,
M will still be required to pay X. On the other hand, if there is no
monthly salary, M will not be reimbursed. Clearly, the condition is
imposed not on the payment or not on the order to pay but on the
reimbursement.
There is still a condition imposed, it is just that it does not affect the
order to pay because the condition is imposed on the reimbursement.
Sir: Section 3 of the NIL is actually expressive of that policy in the that if ever
there is an indication of a fund from which reimbursement is to be made, it
does not render the order or the promise conditional.

Applicable provision:
Section 3. When promise is unconditional. An unqualified order or
promise to pay is unconditional within the meaning of this Act, though
coupled with
a. An indication of a particular fund out of which reimbursement is to be
made, or a particular account to be debited with the amount; or
b. A statement of the transaction which gives rise to the instrument.
But a promise to pay out of a particular fund is not unconditional.
Example:
To: M
Pay to X or order P1,000,000 as payment of my debt to
him.
Sgd.
__________
Sir: Is this now conditional?
No, Sir. The order to pay is still unconditional since the added
statement of as payment of my debt to him is just a statement of the
transaction which gave rise to the instrument.
The legal basis is Section 3b.
A statement of what gave rise of the obligation to pay does not render
the order or the promise conditional.
Sir: You can place there:
To: M
For value received, pay to X or order P1,000,000.
In other words, because of the value that the drawer received from X,
he is requiring M to pay X or his order. It does not make the order to
pay conditional because it is just a mere statement of why I am
ordering you to pay.
Whether or not that consideration or that particular transaction did
happen, it will not matter whether M is required to pay or not. It would
still require M to pay X or order regardless of what transaction may
have transpired between X and the drawer of this instrument.
It does not render the instrument non-negotiable because the order to
pay is still unconditional.
Sir: Is sum certain in money same as certain sum of money? What is the
criteria for you to say a sum certain in money?
The sum certain requirement is met if the holder can determine from
the instrument itself the amount he is entitled to receive at maturity.

Example:
To: M
Pay to X or order the sum as indicated in our loan contract
as payment of my debt to him.
Sgd.
__________
Sir: Is the example a sum certain in money?
No, Sir because it would now entail looking at another contract which is
the loan contract in order to ascertain the sum of money to be paid.
It makes the instrument non-negotiable because it does not conform to
the requirement of a sum certain in money. This is because in the
example given, you will have to refer to another source (loan contract)
in order to determine the amount.