Documents of Title

A document of title is a document used in the ordinary course of business in the sale or transfer of goods as proof of possession/control of the goods or authorizing/purporting to authorize the holder of the document to transfer the goods represented by the document or receive them by either by declivity or indorsement. A document of title is negotiable if it states that the goods indicated on it will be delivered to the bearer or the order of the person named in the document. It's non-negotiable if deliverable to a specific person.

Negotiating a negotiable document of title may be done by the indorsement of the person to whose order the goods are deliverable by the document's terms. The indorsement may be in blank, to bearer or a specified person. If it's indorsed to a specific person, he can negotiate it further also in blank, to bearer or a specific person. This is true even if the document is marked "non-negotiable."

Functions:

1.) A contract

2.) Evidence of receipt of goods

3.) Represents the goods/control over the goods

Common Documents of Title

1.) Bill of Lading

A contract and receipt for the transport and delivery of goods to the bearer of order of the person indicated on it. It is issued by a common carrier and is essentially a contract of carriage even if it isn't normally signed by the parties.

2.) Quedan

A warehouse receipt that covers sugar.

3.) Warehouse Receipt

A contract and receipt for goods deposited with a warehouseman to be delivered to the bearer or to the order of a person indicated on it. It is issued by a warehouseman engaged in the business of storing goods for a fee.

4.) Dock Warrant

An instrument a dock owner issues to an importer of goods as evidence of his title to the goods warehoused on the dock upon the faith of the bills of lading.

If the owner of a negotiable document of title loses a case, the winner can't have the goods attached or levied by ordinary legal process upon if the goods are in the possession of a bailee (warehouseman, etc.) The bailee is obliged to retain possession of the goods for the original owner of the document or to the holder if the document was negotiated. The remedy is to either surrender the document or have the court enjoin the negotiation. If the document was negotiated to another person in good faith, the negotiation is valid and an injunction won't affect it.

If a seller learns that his buyer is insolvent, he can only invoke his right to stoppage in transitu if the document of title wasn't negotiated to a purchaser in good faith and for value. The innocent buyer's right to receive the goods is considered superior to the unpaid seller's rights to stoppage in transitu or exercising a lien over the goods.