§ 25-7-502. Rights acquired by due negotiation. - North Carolina Statutes

§ 25‑7‑502. Rights acquired by due negotiation.

(a)        Subject to G.S. 25‑7‑205and G.S. 25‑7‑503, a holder to which a negotiable document of titlehas been duly negotiated acquires thereby:

(1)        Title to thedocument;

(2)        Title to the goods;

(3)        All rights accruingunder the law of agency or estoppel, including rights to goods delivered to thebailee after the document was issued; and

(4)        The directobligation of the issuer to hold or deliver the goods according to the terms ofthe document free of any defense or claim by the issuer except those arisingunder the terms of the document or under this Article, but in the case of adelivery order, the bailee's obligation accrues only upon the bailee'sacceptance of the delivery order, and the obligation acquired by the holder isthat the issuer and any indorser will procure the acceptance of the bailee.

(b)        Subject to G.S. 25‑7‑503,title and rights acquired by due negotiation are not defeated by any stoppageof the goods represented by the document of title or by surrender of the goodsby the bailee and are not impaired even if:

(1)        The due negotiationor any prior due negotiation constituted a breach of duty;

(2)        Any person has beendeprived of possession of a negotiable tangible document or control of anegotiable electronic document by misrepresentation, fraud, accident, mistake,duress, loss, theft, or conversion; or

(3)        A previous sale orother transfer of the goods or document has been made to a third person. (1917, c. 37, ss. 41, 47 to49; 1919, c. 65, ss. 31, 37 to 39; C.S., ss. 313, 319 to 321, 4081, 4087 to4089; 1931, c. 358, s. 3; 1965, c. 700, s. 1; 1998‑217, s. 4(b); 2006‑112,s. 25.)