§ 7-501 — Form of Negotiation and Requirements of Due Negotiation

Section 7--501. Form of Negotiation and Requirements of Due Negotiation.\n (a) The following rules apply to a negotiable tangible document of\ntitle:\n (1) If the document's original terms run to the order of a named\nperson, the document is negotiated by the named person's indorsement and\ndelivery. After the named person's indorsement in blank or to bearer,\nany person may negotiate the document by delivery alone.\n (2) If the document's original terms run to bearer, it is negotiated\nby delivery alone.\n (3) If the document's original terms run to the order of a named\nperson and it is delivered to the named person, the effect is the same\nas if the document had been negotiated.\n (4) Negotiation of the document after it has been indorsed to a named\nperson requires indorsement by the named person and delivery.\n (5) A document is duly negotiated if it is negotiated in the manner\nstated in this subsection to a holder that purchases it in good faith,\nwithout notice of any defense against or claim to it on the part of any\nperson, and for value, unless it is established that the negotiation is\nnot in the regular course of business or financing or involves receiving\nthe document in settlement or payment of a monetary obligation.\n (b) The following rules apply to a negotiable electronic document of\ntitle:\n (1) If the document's original terms run to the order of a named\nperson or to bearer, the document is negotiated by delivery of the\ndocument to another person. Indorsement by the named person is not\nrequired to negotiate the document.\n (2) If the document's original terms run to the order of a named\nperson and the named person has control of the document, the effect is\nthe same as if the document had been negotiated.\n (3) A document is duly negotiated if it is negotiated in the manner\nstated in this subsection to a holder that purchases it in good faith,\nwithout notice of any defense against or claim to it on the part of any\nperson, and for value, unless it is established that the negotiation is\nnot in the regular course of business or financing or involves taking\ndelivery of the document in settlement or payment of a monetary\nobligation.\n (c) Indorsement of a nonnegotiable document of title neither makes it\nnegotiable nor adds to the transferee's rights.\n (d) The naming in a negotiable bill of lading of a person to be\nnotified of the arrival of the goods does not limit the negotiability of\nthe bill or constitute notice to a purchaser of the bill of any interest\nof that person in the goods.\n