Documents of Title

The Commercial Code, in Division 7, Chapter 1, provides general provisions related to documents of title. Section 7101 titles Chapter 1 as the Uniform Commercial Code—Documents of Title.

Section 7102 defines the following terms: “bailee,” “carrier,” “consignee,” “consignor,” “delivery order,” “good faith,” “goods,” “issuer,” “person entitled under the document,” “shipper,” “warehouse,” “contract for sale,” lessee in the ordinary course of business,” and “receipt of goods.”

Section 7103 provides this division is subject to any treaty or statute of the United States or regulatory statute of this state to the extent the treaty, statute, or regulatory statute is applicable. This division does not modify or repeal any law prescribing the form or content of a document of title or the services or facilities to be afforded by a bailee. However, violation of this law does not affect the status of a document of title that otherwise is within the definition of a document of title.

Section 7104 provides that a document of title is negotiable if by its terms the goods are to be delivered to bearer or to the order of a named person. A document of title is generally nonnegotiable. A bill of lading that states that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against an order in a record signed by the same or another named person. And, a document of title is nonnegotiable if, at the time it is issued, the document has a conspicuous legend, however expressed, that it is nonnegotiable.

Section 7105 states that, upon request of a person entitled under an electronic document of title, the issuer of the electronic document may issue a tangible document of title as a substitute for the electronic document if two specified conditions are met. Upon request of a person entitled under a tangible document of title, the issuer of the tangible document may issue an electronic document of title as a substitute for the tangible document if two specified conditions are met.

Section 7106 sets forth that a person has control of an electronic document of title if a system employed for evidencing the transfer of interests in the electronic document reliably establishes that person as the person to which the electronic document was issued or transferred. A person has control of an electronic document of title, if the document is created, stored, and transferred in a manner that meets six specified conditions.

A person has control of an electronic document of title, if an authoritative electronic copy of the document, a record attached to or logically associated with the electronic copy, or a system in which the electronic copy is recorded meets three specified conditions. Also, a power is exclusive even if either specified condition exists. A power of a person is not shared with another person and the person’s power is not exclusive in two specified instances.

A person has control of an electronic document of title if another person, other than the transferor to the person of an interest in the document has control or obtains control of the document. Also, a person that has control under this section is not required to acknowledge that it has control on behalf of another person.