Sec. 42a-7-501. Form of negotiation and requirements of due negotiation.
Sec. 42a-7-501. Form of negotiation and requirements of due negotiation. (a)
The following rules apply to a negotiable tangible document of title:
(1) If the document's original terms run to the order of a named person, the document
is negotiated by the named person's endorsement and delivery. After the named person's
endorsement in blank or to bearer, any person may negotiate the document by delivery
alone.
(2) If the document's original terms run to bearer, it is negotiated by delivery alone.
(3) If the document's original terms run to the order of a named person and it is
delivered to the named person, the effect is the same as if the document had been negotiated.
(4) Negotiation of the document after it has been endorsed to a named person requires endorsement by the named person and delivery.
(5) A document is duly negotiated if it is negotiated in the manner stated in this
subsection to a holder that purchases it in good faith, without notice of any defense
against or claim to it on the part of any person, and for value, unless it is established
that the negotiation is not in the regular course of business or financing or involves
receiving the document in settlement or payment of a monetary obligation.
(b) The following rules apply to a negotiable electronic document of title:
(1) If the document's original terms run to the order of a named person or to bearer,
the document is negotiated by delivery of the document to another person. Endorsement
by the named person is not required to negotiate the document.
(2) If the document's original terms run to the order of a named person and the
named person has control of the document, the effect is the same as if the document
had been negotiated.
(3) A document is duly negotiated if it is negotiated in the manner stated in this
subsection to a holder that purchases it in good faith, without notice of any defense
against or claim to it on the part of any person, and for value, unless it is established
that the negotiation is not in the regular course of business or financing or involves
taking delivery of the document in settlement or payment of a monetary obligation.
(c) Endorsement of a nonnegotiable document of title neither makes it negotiable
nor adds to the transferee's rights.
(d) The naming in a negotiable bill of lading of a person to be notified of the arrival
of the goods does not limit the negotiability of the bill or constitute notice to a purchaser
of the bill of any interest of that person in the goods.
(1959, P.A. 133, S. 7-501; P.A. 04-64, S. 29.)
History: P.A. 04-64 amended section to adopt the 2003 Revision of Uniform Commercial Code Article 7-Documents
of Title.