400.7-502. Rights acquired by due negotiation.
Rights acquired by due negotiation.
400.7-502. (1) Subject to the following section and to theprovisions of section 400.7-205 on fungible goods, a holder towhom a negotiable document of title has been duly negotiatedacquires 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 goods delivered to the bailee after thedocument was issued; and
(d) the direct obligation of the issuer to hold or deliverthe goods according to the terms of the document free of anydefense or claim by him except those arising under the terms ofthe document or under this article. In the case of a deliveryorder the bailee's obligation accrues only upon acceptance andthe obligation acquired by the holder is that the issuer and anyendorser will procure the acceptance of the bailee.
(2) Subject to the following section, title and rights soacquired are not defeated by any stoppage of the goodsrepresented by the document or by surrender of such goods by thebailee, and are not impaired even though the negotiation or anyprior negotiation constituted a breach of duty or even though anyperson has been deprived of possession of the document bymisrepresentation, fraud, accident, mistake, duress, loss, theftor conversion, or even though a previous sale or other transferof the goods or document has been made to a third person.
(L. 1963 p. 503 § 7-502)