§ 7502. Rights acquired by due negotiation.
(a) Rights.--Subject to sections 7205 (relating to title under warehouse receipt defeated in certain cases) and 7503 (relating to document of title to goods defeated in certain cases), a holder to which a negotiable document of title has been duly negotiated acquires thereby all of the following:
(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.
(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 division. 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) Effect of stoppage or surrender.--Subject to section 7503, 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.
Section: Previous 7501 7502 7503 7504 7505 7506 7507 7508 7509 NextLast modified: October 8, 2016