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Documents of Title

A formal document that confers or proves ownership is a document of title.  In order to be a document of title, a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee’s possession.  Article 7 of the UCC is known and can be cited as Uniform Commercial Code-Documents of Title.  Documents of title include a bill of lading, dock warrant, dock receipt, warehouse receipt, and order for the delivery of goods.

A document used to acknowledge the receipt of a shipment of goods is known as a bill of lading.  A transportation company or carrier issues a bill of lading to a shipper.  A bill of lading acknowledges the receipt of goods.  Moreover, the document indicates a particular vessel on which the goods are placed and their destination.  A bill of lading describes the terms and conditions for transporting shipment to its final destination.  A dock warrant is an instrument issued by a ware housekeeper, licensed by the state to traders who deposit goods with them.  A dock warrant certifies that the holder is entitled to goods imported and warehoused in the docks.  A dock receipt is a document of title issued by a shipping company which acknowledges the goods received for shipment.  A dock receipt transfers the accountability for the safe custody of the cargo from a shipper to a carrier.  A dock receipt serves as the basis for preparing a bill of lading.  A document proving ownership of commodities that are stored in a warehouse for safekeeping is a warehouse receipt.  Warehouse receipts guarantee the existence and availability of a commodity in a named storage facility.  It also describes the quantity and quality of goods.  A ware house receipt evidences the transfer of ownership for immediate delivery or delivery at a future date.

A document of title evidences that the person in possession of the document is entitled to receive, hold, and dispose of the document and the goods covered in the document.  A document of title obtains legal existence when it is created and transferred to a person entitled to the document.  The document usually represents commodities in storage or transportation.

A document of title is negotiable when by its terms the goods are to be delivered to the bearer or to the order of the named person.  A document of title is nonnegotiable if at the time it is issued, a document has a conspicuous legend.  The UCC lists all negotiable documents of title.  All documents that are not specified by the UCC as negotiable are nonnegotiable documents of title[i].

A holder of a duly negotiated document acquires the following rights[ii]:

  • title to the document;
  • title to the goods;
  • all rights accruing under the law of agency or estoppel; and
  • direct obligation of the issuer to hold or deliver the goods according to the terms of the document.

When a person negotiates or delivers a document of title for value, the transferor in addition to any warranty made in selling or leasing, warrants to its immediate purchaser that[iii]:

  • the document is genuine; the transferor does not have knowledge of any fact that would impair the document’s validity or worth; and
  • the negotiation or delivery is rightful and fully effective with respect to the title to the document and the goods it represents.

When a document of title is lost, stolen, or destroyed, a court may order delivery of the goods or issuance of a substitute document.  A bailee is liable for conversion when s/he delivers goods to a person claiming under a missing document without a court order[iv].

[i] U.C.C.§ 7-104

[ii] U.C.C.§ 7-502

[iii] U.C.C.§ 7-508

[iv] U.C.C.§ 7-601(2)

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