8.7-501 - Form of negotiation and requirements of "due negotiation".
§ 8.7-501. Form of negotiation and requirements of "due negotiation".
(1) The following rules apply to a negotiable tangible document:
(a) If the document's original terms run to the order of a named person, thedocument is negotiated by his endorsement and delivery. After his endorsementin blank or to bearer any person can negotiate the document by delivery alone.
(b) If the document's original terms run to bearer, it is negotiated bydelivery alone.
(c) If a document's original terms run to the order of a named person and itis delivered to him, the effect is the same as if the document had beennegotiated.
(d) Negotiation of the document after it has been endorsed to a named personrequires endorsement by the named person as well as delivery.
(e) A document is "duly negotiated" when it is negotiated in the mannerstated in this subsection to a holder who purchases it in good faith, withoutnotice of any defense against or claim to it on the part of any person, andfor value, unless it is established that the negotiation is not in theregular course of business or financing or involves receiving the document insettlement or payment of a money obligation.
(2) The following rules apply to a negotiable electronic document:
(a) If the document's original terms run to the order of a named person or tobearer, the document is negotiated by delivery of the document to anotherperson. Endorsement by the named person is not required to negotiate thedocument.
(b) If the document's original terms run to the order of a named person andthe named person has control of the document, the effect is the same as ifthe document had been negotiated.
(c) A document is duly negotiated if it is negotiated in the manner stated inthis subsection to a holder that purchases it in good faith, without noticeof any defense against or claim to it on the part of any person, and forvalue, unless it is established that the negotiation is not in the regularcourse of business or financing or involves taking delivery of the documentin settlement or payment of a monetary obligation.
(3) Endorsement of a nonnegotiable document neither makes it negotiable noradds to the transferee's rights.
(4) The naming in a negotiable bill of a person to be notified of the arrivalof the goods does not limit the negotiability of the bill nor constitutenotice to a purchaser thereof of any interest of such person in the goods.
(Code 1950, §§ 61-40 to 61-43, 61-50; 1964, c. 219; 2004, c. 200.)