Texas Business & Commerce Code - Section 7.502. Rights Acquired By Due Negotiation
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§ 7.502. RIGHTS ACQUIRED BY DUE NEGOTIATION. (a) Subject
to Sections 7.205 and 7.503, a holder to which a negotiable document
of title has been duly negotiated acquires thereby:
(1) title to the document;
(2) title to the goods;
(3) all rights accruing under the law of agency or
estoppel, including rights to goods delivered to the bailee after
the document was issued; and
(4) the direct obligation of the issuer to hold or
deliver the goods according to the terms of the document free of any
defense or claim by the issuer except those arising under the terms
of the document or under this chapter. In the case of a delivery
order, the bailee's obligation accrues only upon the bailee's
acceptance of the delivery order and the obligation acquired by the
holder is that the issuer and any indorser will procure the
acceptance of the bailee.
(b) Subject to Section 7.503, title and rights acquired by
due negotiation are not defeated by any stoppage of the goods
represented by the document of title or by surrender of the goods by
the bailee and are not impaired even if:
(1) the due negotiation or any prior due negotiation
constituted a breach of duty;
(2) any person has been deprived of possession of a
negotiable tangible document or control of a negotiable electronic
document by misrepresentation, fraud, accident, mistake, duress,
loss, theft, or conversion; or
(3) a previous sale or other transfer of the goods or
document has been made to a third person.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 2005, 79th Leg., ch. 122, § 1, eff. Sept. 1,
2005.
Section: 7.308 7.309 7.401 7.402 7.403 7.404 7.501 7.502 7.503 7.504 7.505 7.506 7.507 7.508 7.509
Last modified: August 10, 2007
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