R8 Documents of Title

Question 1

What is a holder of a duly negotiated document of title?

Answer 1

A person who:

• Gives present value
• Takes in good faith without notice of defenses or adverse claims
• Takes the document in the regular course of business or financing

Such person is like a holder in due course of commercial papers - subject to few defenses

Question 2

How are documents of title negotiated?

Answer 2

Like commercial paper, the procedure negotiating a document of title depends on whether the document is bearer or order document:

• A bearer document is negotiated by delivery alone
• An order document requires delivery plus a valid signature

Question 3

What are the three transfer warranties made by a transferor of a document of title?

Answer 3

• The document is genuine
• The transferor has no knowledge of any fact that would impair the document’s validity or value
• The negotiation or transfer is rightful and effective

Question 4

What is the duty of care of a common carried?

Answer 4

At common law, a common carrier has a high standard of care. It is treated as an insurer of the goods and is liable for all damages to the goods that occur during shipment regardless of cause.

Question 5

What governs the documents of title?

Answer 5

Article 7 which is similar to Article 3 for Commercial Paper but article 7 focuses on:

• Warehouse receipts - issued by warehouseman
• Bill of lading - issued by a common carrier