(a) Subject to Sections 7205 and 7503, a holder to which a negotiable document of title has been duly negotiated acquires thereby:

(1) title to the document;

Terms Used In California Commercial Code 7502

  • Bailee: means a person that by a warehouse receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them. See California Commercial Code 7102
  • Delivery order: means a record that contains an order to deliver goods directed to a warehouse, carrier, or other person that in the ordinary course of business issues warehouse receipts or bills of lading. See California Commercial Code 7102
  • Document of title: includes a bill of lading, dock warrant, dock receipt, warehouse receipt, or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers. See California Commercial Code 1201
  • Electronic: means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. See California Commercial Code 1201
  • Fraud: Intentional deception resulting in injury to another.
  • Goods: means all things that are treated as movable for the purposes of a contract for storage or transportation. See California Commercial Code 7102
  • Holder: means :

    California Commercial Code 1201

  • Issuer: means a bailee that issues a document of title or, in the case of an unaccepted delivery order, the person that orders the possessor of goods to deliver. See California Commercial Code 7102
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See California Commercial Code 1201

(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 division, 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 7503, 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.

(Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)

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