Virginia Code 8.7-501: Form of negotiation and requirements of “due negotiation”
(1) The following rules apply to a negotiable tangible document:
Terms Used In Virginia Code 8.7-501
- Document: means document of title as defined in the general definitions in Title 8. See Virginia Code 8.7-102
- Good faith: means honesty in fact and the observance of reasonable commercial standards of fair dealing. See Virginia Code 8.7-102
- Goods: means all things that are treated as movable for the purposes of a contract of storage or transportation. See Virginia Code 8.7-102
- 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: includes any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or any other legal or commercial entity and any successor, representative, agent, agency, or instrumentality thereof. See Virginia Code 1-230
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(a) If the document’s original terms run to the order of a named person, the document is negotiated by his endorsement and delivery. After his endorsement in blank or to bearer any person can negotiate the document by delivery alone.
(b) If the document’s original terms run to bearer, it is negotiated by delivery alone.
(c) If a document’s original terms run to the order of a named person and it is delivered to him, the effect is the same as if the document had been negotiated.
(d) Negotiation of the document after it has been endorsed to a named person requires endorsement by the named person as well as delivery.
(e) A document is “duly negotiated” when it is negotiated in the manner stated in this subsection to a holder who 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 money obligation.
(2) The following rules apply to a negotiable electronic document:
(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. Endorsement 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) Endorsement of a nonnegotiable document neither makes it negotiable nor adds to the transferee’s rights.
(4) The naming in a negotiable bill of a person to be notified of the arrival of the goods does not limit the negotiability of the bill nor constitute notice to a purchaser thereof of any interest of such person in the goods.
Code 1950, §§ 61-40 to 61-43, 61-50; 1964, c. 219; 2004, c. 200.