§ 6A-7-502 - Rights acquired by due negotiation. - Rhode Island Statutes

SECTION 6A-7-502

   § 6A-7-502  Rights acquired by duenegotiation. – (a) Subject to §§ 6A-7-205 and 6A-7-503, a holder to which anegotiable document of title has been duly negotiated acquires thereby:

   (1) Title to the document;

   (2) Title to the goods;

   (3) All rights accruing under the law of agency or estoppel,including rights to goods delivered to the bailee after the document wasissued; and

   (4) The direct obligation of the issuer to hold or deliverthe goods according to the terms of the document free of any defense or claimby the issuer except those arising under the terms of the document or underthis chapter, but in the case of a delivery order, the bailee's obligationaccrues only upon the bailee's acceptance of the delivery order and theobligation acquired by the holder is that the issuer and any indorser willprocure the acceptance of the bailee.

   (b) Subject to § 6A-7-503, title and rights acquired bydue negotiation are not defeated by any stoppage of the goods represented bythe document of title or by surrender of the goods by the bailee and are notimpaired even if:

   (1) The due negotiation or any prior due negotiationconstituted a breach of duty;

   (2) Any person has been deprived of possession of anegotiable tangible document or control of a negotiable electronic document bymisrepresentation, fraud, accident, mistake, duress, loss, theft, orconversion; or

   (3) A previous sale or other transfer of the goods ordocument has been made to a third person.