QUIZZER: DOCUMENT OF TITLE TO GOODS

1. What are the three common forms of document of title? Describe each.

Document of title to goods includes any bill of lading, dock warrant, quedan, or warehouse receipt or order for the delivery of goods, or any other document used in the ordinary course of business in the sale or transfer of goods, as proof of the possession or control of the goods, or authorizing or purporting to authorize the possession of the document to transfer or receive, either by endorsement or by delivery, goods represented by such documents.

a)Warehouse receipt – the written acknowledgment by the warehouseman that he has received and holds the goods therein described for the person to whom it was issued.

b)Bill of lading – a written acknowledgment of the receipt of goods and an agreement to transport and to deliver them at a specified place to a person named or his order. Such instruments are sometimes called shipping receipts, forwarder’s receipts, and receipts for transportation.

c)Dock warrant – a warrant given by dock owner to the owner of the merchandise imported and warehoused on the dock upon the faith of the bill of lading, as a recognition of his title to the goods.

2. What are the threefold characters or nature of a document of title?

First it is a contract in itself and the parties are bound by its terms. Second, a document of title is a receipt. Third, it is a symbol of the goods covered by it.

3.B stole the goods of X, and thereafter stored them in A’s warehouse. A issued a negotiable receipt to the order of B. B then indorsed the receipt and delivered it to C, A purchaser for value and without notice. Should X notify A that the goods were stolen from him and should not be delivered to the holder of the receipt but despite such notice, A delivered said goods to C. Is A liable to X? Reasons.

Yes. The liability of A is for misdelivery. Despite good faith and lack of notice of the third person, C, and of his having given value for the receipt, he acquires not title to the good by the negotiation of the receipt to him. The owner of the goods would still be able to claim them from the warehouseman.

4.A sold goods to B. B did not pay in full the price of the goods. As seller, A has a lien over the goods or the right to stop the goods in transit, for the unpaid price of the goods. B deposited the goods with a warehouseman and a negotiable warehouse receipt was issued. B negotiated the receipt to C who had no notice of the lien of A, the seller of the goods. Does this lien prevent C from obtaining delivery of the goods by the warehouseman? Why?

Answer: No. C can obtain delivery of the goods from the warehouseman. Where a negotiable instrument has been issued for goods, no seller’s lien or right of stoppage in transitu shall defeat the rights of any purchaser for value and in good faith to whom such receipt has been negotiated, whether such negotiation be prior or subsequent to the notification to the warehouseman who issued such receipt of the seller’s claim to a lien or right of stoppage in transit.