N.Y. Uniform Commercial Code Law § 7-502: Rights Acquired by Due Negotiation

Section 7--502. Rights Acquired by Due Negotiation.

(a) Subject to Sections 7--205 and 7--503, 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 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.

(b) Subject to Section 7--503, 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:

(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.