R8.7 – Documents of Title (Article 7) Flashcards
Negotiability
Document of title is negotiable if by its terms goods are to be delivered to “bearer” or “to the order of <named>”</named>
A bearer document of title is negotiated by delivery alone
An order document of title is negotiated by deliver + valid signature of person named in the document or later endorsed party
Warehouse or carrier must obtain possession of the original document, or will be liable to any party damaged by misdelivery
Documents of Title (UCC Article 7)
Documents of title governed by UCC Article 7
Documents of title provide a convenient and safe way to transfer title to the good stored and transported.
The party holding the document has the rights to have the goods represented by the document delivered to him.
Note: an issuer who delivers goods pursuant to document of title not liable for misdelivery if subsequently discovered that person to who goods delivered not authorized to receive them
2 types of documents
– Warehouse receipts – goods stored in a warehouse
– Bills of lading – goods transported by common carrier
Bailee = issuer of document of title
– Holds goods belonging to bailor
Holder of Document of Title
To be holder of a duly negotiated document of title, one must:
give present value for document of title
1. Take document of title in good faith
2. Be without any notice of an adverse claim or defense
3. Have been obtained it in the regular course of business or financing
A holder to whom a document of title has been duly negotiated acquires tittle to both the document and the good represented by the document.
– He also acquires right to have goods delivered to him free of any defense not on the face of the document
Non-Negotiable Documents of Title
For non-negotiable documents of title, goods must be delivery to party named (consignee) in the document
Carrier or warehouse does not have to take possession of document
Warehouse Receipt
Warehouse receipt = document of title issued by a warehouseman entitling a name person, or his order, or the bearer of the receipt to delivery of stated goods
Essential terms
– Who: Who is to received goods?
– What: Description of goods and number of receipt
– When: Date receipt issued
– Where: Where goods are stored
– How much: State fees and storage rates
– Signed: Signature of warehouser or agent
If a blank in a warehouse receipt is filled out without authority, a purchaser of the receipt who gives value and does not know of the unauthorized competition is entitled to enforce receipt as completed
Other alterations are ineffective – issuer liable only for original terms of the receipt
Warehouse Lien
Warehouseman has lien on stored goods for storage charges, insurance, labor, and other expenses reasonably incurred in storage
If negotiable receipt issued, warehouseman’s lien limited against person to whom receipt has been duly negotiation to charges set in the receipt or to reasonable storage gees
Lien is lost if warehouseman voluntarily delivers goods
Warehouseman can enforce lien by selling stored goods
– Must notify all interest parties of sale
– Sale must be commercially reasonable
Bill of Lading
Bill of lading issued by carrier
Must identify:
– Goods being shipped
– Destination
– Consignor: Person from whom goods received by carrier
– Consignee: Person to whom, or to whose order, the goods will be delivered
Common carrier has high duty of care
– Treated as an insurer of the goods and is liable for all damages to the goods that occur during shipment
– Carrier can limit its common-law liability by inserting in the bill of lading a provision limiting liability to a certain amount of requiring claims be presented within a certain time
If bill of lading altered without authorization, it is enforceable only according to its original terms.
Carrier’s Lien
Carrier has lien on goods covered by bill for storage and transportation charges, and for expenses incurred in stored in storing the goods
Lien is limited to charges set in bill, or reasonable charges against a purchaser for value of a negotiable bill of lading
