Abstract: Air-drying, water-reducible, acid-functional polyurethanes are obtained by reacting:(i) a 2-oxazoline containing adduct having the structure: ##STR1## wherein R.sub.1 is the aliphatic fatty acid residue from a fatty acid R.sub.1 COOH; and(ii) a diisocyanate; and(iii) an acid-functional compound which also has two active hydrogen groups, other than acid groups, which are reactive with the diisocyanate.

Abstract: This invention relates to a novel air drying acrylic modified polyester composition and to the method of preparing said compositions which are particularly useful in forming coatings on various substrates and particularly on metal surfaces. The acrylic modified polyesters are water reducible and are obtained from the copolymerization of a polyester prepolymer and a combination of ethylenically unsaturated vinyl monomers comprising at least one acrylic monomer. The prepolymers are derived from the reaction of a styrene-allylic alcohol polymer with a mixture of unsaturated monocarboxylic acids comprising at least one unsaturated fatty acid and at least one monoanhydride having at least one free carboxylic acid group.