70A-7a-502 - Rights acquired by due negotiation.
70A-7a-502. Rights acquired by due negotiation.
(1) Subject to Sections 70A-7a-205 and 70A-7a-503, a holder to which a negotiabledocument of title has been duly negotiated acquires thereby:
(a) title to the document;
(b) title to the goods;
(c) all rights accruing under the law of agency or estoppel, including rights to goodsdelivered to the bailee after the document was issued; and
(d) the direct obligation of the issuer to hold or deliver the goods according to the termsof the document free of any defense or claim by the issuer except those arising under the terms ofthe document or under this chapter, but in the case of a delivery order, the bailee's obligationaccrues only upon the bailee's acceptance of the delivery order and the obligation acquired by theholder is that the issuer and any indorser will procure the acceptance of the bailee.
(2) Subject to Section 70A-7a-503, title and rights acquired by due negotiation are notdefeated by any stoppage of the goods represented by the document of title or by surrender of thegoods by the bailee and are not impaired even if:
(a) the due negotiation or any prior due negotiation constituted a breach of duty;
(b) any person has been deprived of possession of a negotiable tangible document orcontrol of a negotiable electronic document by misrepresentation, fraud, accident, mistake,duress, loss, theft, or conversion; or
(c) a previous sale or other transfer of the goods or document has been made to a thirdperson.
Enacted by Chapter 42, 2006 General Session