KRS 355.7-501: Form of negotiation and requirements of due negotiation.

(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 i n 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 as well as delivery.

(e) A document is duly negotia ted 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 th e 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 pe rson 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 nonnegotiable 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 do es 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.