41-07-30. (7-501) Form of negotiation and requirements of due negotiation.
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/nd/title-41/chapter-41-07-documents-of-title/41-07-30·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
1. The following rules apply to a negotiable tangible document of title:
a. If the document's original terms run to the order of a named person, the
document is negotiated by the named person's indorsement and delivery. After
the named person's indorsement in blank or to bearer, any person may negotiate
the document by delivery alone.
b. If the document's original terms run to bearer, it is negotiated by delivery alone.
c. If the document's original terms run to the order of a named person and it is
delivered to the named person, the effect is the same as if the document had
been negotiated.
d. Negotiation of the document after it has been indorsed to a named person
requires indorsement by the named person and delivery.
e. A document is duly negotiated if it is negotiated in the manner stated in this
subsection to a holder that purchases it in good faith, without notice of any
defense against or claim to it on the part of any person, and for value, unless it is
established that the negotiation is not in the regular course of business or
financing or involves receiving the document in settlement or payment of a
monetary obligation. 2. The following rules apply to a negotiable electronic document of title:
a. If the document's original terms run to the order of a named person or to bearer,
the document is negotiated by delivery of the document to another person.
Indorsement by the named person is not required to negotiate the document.
b. If the document's original terms run to the order of a named person and the
named person has control of the document, the effect is the same as if the
document had been negotiated.
c. A document is duly negotiated if it is negotiated in the manner stated in this
subsection to a holder that purchases it in good faith, without notice of any
defense against or claim to it on the part of any person, and for value, unless it is
established that the negotiation is not in the regular course of business or
financing or involves taking delivery of the document in settlement or payment of
a monetary obligation. 3. Indorsement of a non-negotiable document of title neither makes it negotiable nor
adds to the transferee's rights. 4. The naming in a negotiable bill of lading of a person to be notified of the arrival of the
goods does not limit the negotiability of the bill or constitute notice to a purchaser of
the bill of any interest of that person in the goods.
41-07-31. (7-502) Rights acquired by due negotiation. 1. Subject to sections 41-07-11 and 41-07-32, a holder to which a negotiable document
of title has been duly negotiated acquires 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 the document was issued; and
d. 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 chapter, but in the case of a
delivery order, the bailee's obligation accrues only upon the bailee's acceptance
of the delivery order and the obligation acquired by the holder is that the issuer
and any indorser will procure the acceptance of the bailee. 2. Subject to section 41-07-32, title and rights acquired by due negotiation are not
defeated by any stoppage of the goods represented by the document of title or by
surrender of the goods by the bailee and are not impaired even if:
a. The due negotiation or any prior due negotiation constituted a breach of duty;
b. 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
c. A previous sale or other transfer of the goods or document has been made to a
third person.