Okla. Stat. tit. 12A § 7-502

Current through Laws 2024, c. 453.

Section 7-502 - Rights acquired by due negotiation

(a) Subject to Sections 7-205 and 7-503 of this title, a holder to which a negotiable 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 was issued; and

(4) the direct obligation of the issuer to hold or deliver the goods according to the terms of the document free of any defense or claim by the issuer except those arising under the terms of the document or under this article, but in the case of a delivery order, the bailee's obligation accrues only upon acceptance of the delivery order and the obligation acquired by the holder is that the issuer and any endorser will procure the acceptance of the bailee.

(b) Subject to Section 7-503 of this title, title and rights acquired by due negotiation are not defeated by any stoppage of the goods represented by the document or by surrender of the goods by the bailee and are not impaired even if:

(1) the due negotiation or any prior due negotiation constituted a breach of duty;

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

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

Okla. Stat. tit. 12A, § 7-502

Laws 1961, p. 149, § 7-502; Amended by Laws 2005 , HB 2035, c. 140, § 29, eff. 1/1/2006.

Oklahoma Code Comment

Prior Statutory Provisions:

2 Okl.St.Ann. §§ 9-100, 9-106 to 9-108.

13 Okl.St.Ann. § 92.

Comment:

(1)(a) and (b) The language is different, and a great deal more direct, than former 2 Okl.St.Ann. § 9-100.

(c) The first part is similar to former 2 Okl.St.Ann. § 9-100(a) in legal effect, although different in language. The second part of the sentence recognizes the law of "feeding" the document--that is, delivery of goods to the bailee after the document has been issued. There is no previous Oklahoma law on "feeding."

(d) The first portion is similar to former 2 Okl.St.Ann. § 9-100(b). The previous Oklahoma bill of lading law had no comparable provision. The second sentence is new. A delivery order is not binding upon the bailee until his acceptance, but the issuer and indorsers warrant that it will be accepted.

(2) The holder of a document is in many respects similar to a holder in due course of a negotiable instrument. He can obtain better rights than the transferor had. Thus, his rights are not defeated by claims to the goods represented by the document. Thus, as between a purchaser of the goods and the purchaser of a negotiable document, the holder of the document, prevails. Also, the holder acquires title even though the document was negotiated in excess of authority, in breach of trust, or had been obtained by the transferor by theft, conversion, etc. This changes the Oklahoma law. Former 2 Okl.St.Ann. § 9-99 provided that only the person to whom the receipt has been "entrusted" had the power to convey good title