§ 26-1-7-501 — 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 negotiable 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 and delivery.
(5) A negotiable document of title is "duly negotiated" when it is
negotiated in the manner stated in this section to a holder who
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 money 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.
Formerly: Acts 1963, c.317, s.7-501. As amended by
P.L.143-2007, SEC.52.