Section 7--501. Form of Negotiation and Requirements of Due Negotiation.

(a) The following rules apply to a negotiable tangible document of
title:

(1) 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.

(2) If the document's original terms run to bearer, it is negotiated
by delivery alone.

(3) 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.

(4) Negotiation of the document after it has been indorsed to a named
person requires indorsement by the named person and delivery.

(5) 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.

(b) The following rules apply to a negotiable electronic document of
title:

(1) 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.

(2) 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.

(3) 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.

(c) Indorsement of a nonnegotiable document of title neither makes it
negotiable nor adds to the transferee's rights.

(d) 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.