09 LC 29
3769S
House
Bill 451 (COMMITTEE SUBSTITUTE)
By:
Representatives Jacobs of the
80th,
Lindsey of the
54th,
Glanton of the
76th,
Willard of the
49th,
Weldon of the
3rd,
and others
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Title 11 of the Official Code of Georgia Annotated, relating to the
commercial code, so as to adopt the revised Article 7 of the Uniform Commercial
Code; to provide for conforming amendments to other provisions of such title; to
provide for related matters; to provide for applicability; to provide an
effective date; to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
PART
I
SECTION 1-1.
SECTION 1-1.
Title
11 of the Official Code of Georgia Annotated, relating to the commercial code,
is amended by revising Article 7 as follows:
"ARTICLE
7
Part 1
General
Part 1
General
11-7-101.
Short
title.
This
article shall be known and may be cited as 'Uniform Commercial Code —
Documents of Title.'
11-7-102.
Definitions and index
of definitions.
(1)(a)
In this article, unless the context otherwise requires:
(a)(1)
'Bailee' means
the
a
person
who
that
by a warehouse receipt, bill of lading, or other document of title acknowledges
possession of goods and contracts to deliver them.
(b)(2)
'Carrier' means a person that issues a bill of lading.
(3)
'Consignee' means
the
a
person named in a bill
of
lading to
whom
which
or to whose order the bill promises delivery.
(c)(4)
'Consignor' means
the
a
person named in a bill
of
lading as the person from
whom
which
the goods have been received for shipment.
(d)(5)
'Delivery order' means a
written
record that
contains an order to deliver goods
directed to a
warehouseman
warehouse,
carrier, or other person
who
that
in the ordinary course of business issues warehouse receipts or bills of
lading.
(e)(6)
'Document'
means document of title as defined in the general definitions in Article 1 of
this title (Code Section 11-1-201)
'Good faith'
means honesty in fact and the observance of reasonable commercial standards of
fair dealing.
(f)(7)
'Goods' means all things
which
that
are treated as movable for the
purpose
purposes
of a contract of storage or transportation.
(g)(8)
'Issuer' means a bailee who issues a document
of title or,
in the case of
except that
in relation to an unaccepted delivery
order,
it
means the person who orders the possessor
of goods to deliver.
Issuer
The
term includes
any
a
person for
whom
which
an agent or employee purports to act in issuing a document if the agent or
employee has real or apparent authority to issue documents,
notwithstanding
that
even
if the issuer
received
no
did not
receive any
goods,
or
that the goods were
misdescribed,
or
that
in any other respect the agent or employee violated
his
the
issuer's instructions.
(h)(9)
'Warehouseman'
is a person engaged in the business of storing goods for
hire
'Person
entitled under the document' means the holder, in the case of a negotiable
document of title, or the person to which delivery of the goods is to be made by
the terms of, or pursuant to instructions in a record under, a nonnegotiable
document of title.
(10)
'Record' means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable
form.
(11)
'Sign' means, with present intent to authenticate or adopt a
record:
(A)
To execute or adopt a tangible symbol; or
(B)
To attach to or logically associate with the record an electronic sound, symbol,
or process.
(12)
'Shipper' means a person that enters into a contract of transportation with a
carrier.
(13)
'Warehouse' means a person engaged in the business of storing goods for
hire.
(2)(b)
Other
definitions applying to this article or to specified parts thereof, and the Code
sections in which they appear are:
'Duly
negotiate.' Code Section 11-7-501.
'Person
entitled under the document.' Code Section 11-7-403(4).
(3)
Definitions in other articles of this title applying to this article and the
Code sections in which they appear are:
(1)
'Contract for sale.' Code Section 11-2-106.
'Overseas.'
Code Section 11-2-323.
(2)
'Lessee in the ordinary course of business.' Code Section
11-2A-103.
(3)
'Receipt' of goods. Code Section 11-2-103.
(4)(c)
In
addition,
Article 1 of this title contains general definitions and principles of
construction and interpretation applicable throughout this article.
11-7-103.
Relation of article to
treaty,
or
statute,
tariff, classification, or
regulation.
(a)
To the
extent that
Except as
otherwise provided in this article, this article is subject
to any treaty or statute of the United
States, or
tariff, classification, or regulation filed or issued pursuant
thereto
to the extent
the treaty or statute is
applicable,
the provisions of this article are subject
thereto.
(b)
This article 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,
or otherwise regulating a bailee's business in respects not specifically treated
in this article. However, a violation of such a law does not affect the status
of a document of title that otherwise is within the definition of a document of
title.
(c)
This article modifies, limits, and supersedes the federal Electronic Signatures
in Global and National Commerce Act, 15 U.S.C. Section 7001, et seq., but does
not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section
7001(c), or authorize electronic delivery of any of the notices described in
Section 103(b) of that act, 15 U.S.C. Section 7003(b).
(d)
To the extent that there is a conflict between any provisions of the laws of
this state regarding electronic transactions and this article, this article
governs.
11-7-104.
Negotiable and
nonnegotiable
warehouse
receipt, bill of lading, or
other document of
title.
(1)(a)
A warehouse
receipt, bill of lading, or other
Except as
otherwise provided in subsection (c) of this Code section,
a document of title is
negotiable:
(a)
If
if
by its terms the goods are to be delivered to bearer or to the order of a named
person;
or
(b)
Where recognized in overseas trade, if it runs to a named person or
assigns.
(2)(b)
Any other
document
A document of
title other than one described in subsection (a) of this Code
section is nonnegotiable. A bill of
lading in
which it is stated
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
a
written
an
order in a
record signed by the same or another named
person.
(c)
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.
11-7-105.
Construction
against negative
implication
Reissuance
in alternative
medium.
(a)
The
omission from either Part 2 or Part 3 of this article of a provision
corresponding to a provision made in the other part does not imply that a
corresponding rule of law is not
applicable.
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:
(1)
The person entitled under the electronic document surrenders control of the
document to the issuer; and
(2)
The tangible document when issued contains a statement that it is issued in
substitution for the electronic document.
(b)
Upon issuance of a tangible document of title in substitution for an electronic
document of title in accordance with subsection (a) of this Code
section:
(1)
The electronic document ceases to have any effect or validity; and
(2)
The person that procured issuance of the tangible document warrants to all
subsequent persons entitled under the tangible document that the warrantor was
a person entitled under the electronic document when the warrantor surrendered
control of the electronic document to the issuer.
(c)
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:
(1)
The person entitled under the tangible document surrenders possession of the
document to the issuer; and
(2)
The electronic document when issued contains a statement that it is issued in
substitution for the tangible document.
(d)
Upon issuance of an electronic document of title in substitution for a tangible
document of title is accordance with subsection (c) of this Code
section:
(1)
The tangible document ceases to have any effect or validity; and
(2)
The person that procured issuance of the electronic document warrants to all
subsequent persons entitled under the electronic document that the warrantor was
a person entitled under the tangible document when the warrantor surrendered
possession of the tangible document to the issuer.
11-7-106.
Control
of electronic document of title.
(a)
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.
(b)
A system satisfies subsection (a) of this Code section, and a person is deemed
to have control of an electronic document of title, if the document is created,
stored, and assigned in a manner that:
(1)
A single authoritative copy of the document exists which is unique,
identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6)
of this subsection, unalterable;
(2)
The authoritative copy identifies the person asserting control as:
(A)
The person to which the document was issued; or
(B)
If the authoritative copy indicates that the document has been transferred, the
person to which the document was most recently transferred;
(3)
The authoritative copy is communicated to and maintained by the person asserting
control or its designated custodian;
(4)
Copies or amendments that add or change an identified assignee of the
authoritative copy can be made only with the consent of the person asserting
control;
(5)
Each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy that is not the authoritative copy; and
(6)
Any amendment of the authoritative copy is readily identifiable as authorized or
unauthorized.
Part
2
Warehouse Receipts: Special Provisions
Warehouse Receipts: Special Provisions
11-7-201.
Who
Person
that may issue a
warehouse receipt; storage under
government
bond.
(1)(a)
A warehouse receipt may be issued by any
warehouseman
warehouse.
(2)(b)
Where
If
goods,
including distilled spirits and agricultural
commodities,
are stored under a statute requiring a bond against withdrawal or a license for
the issuance of receipts in the nature of warehouse receipts, a receipt issued
for the goods
has like
effect as
is deemed to
be a warehouse receipt even
though
if
issued by a person
who
that
is the owner of the goods and is not a
warehouseman
warehouse.
11-7-202.
Form of warehouse
receipt;
essential
terms; optional terms
effect
of
omission.
(1)(a)
A warehouse receipt need not be in any particular form.
(2)(b)
Unless a warehouse receipt
embodies
within its written or printed terms
provides
for each of the following, the
warehouseman
warehouse
is liable for damages caused
by
the
to a person
injured by its omission
to a person
injured thereby:
(a)(1)
The
A statement of
the location of the warehouse
facility
where the goods are stored;
(b)(2)
The date of issue of the receipt;
(c)(3)
The
consecutive
number
unique
identification code of the
receipt;
(d)(4)
A statement whether the goods received will be delivered to the bearer, to a
specified
named
person, or to a
specified
named
person or
his
its
order;
(e)(5)
The rate of storage and handling charges,
except that
where
unless
goods are stored under a field warehousing
arrangement,
in which case a statement of that fact is
sufficient on a nonnegotiable receipt;
(f)(6)
A description of the goods or
of
the packages containing them;
(g)(7)
The signature of the
warehouseman,
which may be made by his authorized
warehouse or
its agent;
(h)(8)
If the receipt is issued for goods
of
which
that
the
warehouseman
is owner
warehouse
owns, either
solely,
or
jointly,
or in common with others,
a statement
of the fact of
such
that
ownership; and
(i)(9)
A statement of the amount of advances made and of liabilities incurred for which
the
warehouseman
warehouse
claims a lien or security
interest,
unless
(Code
Section 11-7-209). If the precise amount
of
such
advances made or
of
such liabilities incurred
is,
at the time of the issue of the receipt,
is
unknown to the
warehouseman
warehouse
or to
his
its
agent who
issues it
that issued
the receipt,
in which
case a statement of the fact that advances
have been made or liabilities incurred and the purpose
thereof
of the
advances or liabilities is
sufficient.
(3)(c)
A
warehouseman
warehouse
may insert in
his
its
receipt any
other
terms
which
that
are not contrary to the provisions of this title and do not impair
his
its
obligation of delivery
under
(Code
Section
11-7-403)
or
his
its
duty of care
under
(Code
Section
11-7-204).
Any contrary
provisions
shall be
provision
is ineffective.
11-7-203.
Liability for
nonreceipt or misdescription.
A
party to or purchaser for value in good faith of a document of
title,
other than a bill of
lading,
relying in
either case
that
relies upon the description
therein
of the goods
in the
document may recover from the issuer
damages caused by the nonreceipt or misdescription of the goods, except to the
extent
that:
(1)
the
The
document conspicuously indicates that the issuer does not know whether
any
all
or part
or
all of the goods in fact were received or
conform to the description,
as
where
such as a case
in which the description is in terms of
marks or labels or kind, quantity, or condition, or the receipt or description
is qualified by 'contents, condition, and quality unknown,' 'said to contain,'
or the
like
words of
similar import, if such indication
be
is
true,;
or
(2)
the
The
party or purchaser otherwise has notice
of the
nonreceipt or misdescription.
11-7-204.
Duty of care;
contractual limitation of
warehouseman's
warehouse's
liability.
(1)(a)
A
warehouseman
warehouse
is liable for damages for loss of or injury to the goods caused by
his
its
failure to exercise
such
care
in
with
regard to
them
as
the goods
that a reasonably careful
man
person
would exercise under
like
similar
circumstances.
but
unless
Unless
otherwise
agreed,
he
the
warehouse is not liable for damages
which
that
could not have been avoided by the exercise of
such
that
care.
(2)(b)
Damages may be limited by a term in the warehouse receipt or storage agreement
limiting the amount of liability in case of loss or
damage, and
setting forth a specific liability per article or item, or value per unit of
weight, beyond which the
warehouseman
warehouse
shall
is
not
be
liable;
provided, however, that such liability may on
written. Such
a limitation is not effective with respect to the warehouse's liability for
conversion to its own use. On request of
the bailor in
a record at the time of signing
such
the
storage agreement or within a reasonable time after receipt of the warehouse
receipt, the
warehouse's liability may be increased on
part or all of the goods
thereunder,
in which event
covered by the
storage agreement or the warehouse receipt. In this
event, increased rates may be charged
based on
such
an
increased
valuation,
but that no such increase shall be permitted contrary to a lawful limitation of
liability contained in the warehouseman's tariff, if any. No such limitation is
effective with respect to the warehouseman's liability for conversion to his own
use
of the
goods.
(3)(c)
Reasonable provisions as to the time and manner of presenting claims and
instituting
commencing
actions based on the bailment may be included in the warehouse receipt or
tariff
storage
agreement.
11-7-205.
Title under warehouse
receipt defeated in certain cases.
A
buyer in
the
ordinary course of business of fungible goods sold and delivered by a
warehouseman
who
warehouse
that is also in the business of buying and
selling such goods takes
the
goods free of any claim under a warehouse
receipt even
though
it
if the receipt
is negotiable and has been duly
negotiated.
11-7-206.
Termination of storage
at
warehouseman's
warehouse's
option.
(1)(a)
A
warehouseman
may on notifying
warehouse, by
giving notice to the person on whose
account the goods are held and any other person known to claim an interest in
the goods,
may require payment of any charges and
removal of the goods from the warehouse at the termination of the period of
storage fixed by the
document,
of
title or, if
no
a
period is
not
fixed, within a stated period not less than 30 days after the
notification
warehouse
gives notice. If the goods are not
removed before the date specified in the
notification
notice,
the
warehouseman
warehouse
may sell them
in
accordance with the provisions of the Code section on enforcement of a
warehouseman's lien
(pursuant
to Code
Section 11-7-210).
(2)(b)
If a
warehouseman
warehouse
in good faith believes that
the
goods are about to deteriorate or decline in value to less than the amount of
his
its
lien within the time
prescribed
provided
in subsection
(1)
(a)
of this Code section
for
notification, advertisement, and sale
and Code
Section 11-7-210, the
warehouseman
warehouse
may specify in the
notification
notice given
under subsection (a) of this Code section
any
reasonable,
shorter time for removal of the goods
and,
in
case
if
the goods are not removed, may sell them at public sale held not less than one
week after a single advertisement or posting.
(3)(c)
If,
as a result of a quality or condition of the goods of which the
warehouseman
had no
warehouse did
not have notice at the time of
deposit,
the goods are a hazard to other
property,
or
to the warehouse
facilities,
or
to
other
persons, the
warehouseman
warehouse
may sell the goods at public or private sale without advertisement
or
posting on reasonable notification to all
persons known to claim an interest in the goods. If the
warehouseman
warehouse,
after a reasonable
effort,
is unable to sell the
goods,
he
it
may dispose of them in any lawful manner and
shall
does
not incur
no
liability by reason of
such
that
disposition.
(4)(d)
The
warehouseman must
A warehouse
shall deliver the goods to any person
entitled to them under this article upon due demand made at any time
prior
to
before
sale or other disposition under this Code section.
(5)(e)
The
warehouseman
A
warehouse may satisfy
his
its
lien from the proceeds of any sale or disposition under this Code section but
must
shall
hold the balance for delivery on the demand of any person to
whom
he
which the
warehouse would have been bound to deliver
the goods.
11-7-207.
Goods
must
shall
be kept separate; fungible goods.
(1)(a)
Unless the warehouse receipt
otherwise
provides
otherwise,
a
warehouseman
must
warehouse
shall keep separate the goods covered by
each receipt so as to permit at all times identification and delivery of those
goods.
However,
except
that different lots of fungible goods may
be commingled.
(2)(b)
Fungible
If different
lots of fungible goods
so
are
commingled,
the goods are owned in common by the
persons entitled thereto and the
warehouseman
warehouse
is severally liable to each owner for that owner's share.
Where
If,
because of
overissue,
a mass of fungible goods is insufficient to meet all the receipts
which
the
warehouseman
warehouse
has issued against it, the persons entitled include all holders to whom
overissued receipts have been duly negotiated.
11-7-208.
Altered warehouse
receipts.
Where
If
a blank in a negotiable warehouse receipt has been filled in without authority,
a
good-faith
purchaser for value and without notice of the
want
lack
of authority may treat the insertion as authorized. Any other unauthorized
alteration leaves any
tangible or
electronic warehouse receipt enforceable
against the issuer according to its original tenor.
11-7-209.
Lien of
warehouseman
warehouse.
(1)(a)
A
warehouseman
warehouse
has a lien against the bailor on the goods covered by a warehouse receipt
or storage
agreement or on the proceeds thereof in
his
its
possession for charges for storage or
transportation,
(including
demurrage and terminal
charges),
insurance, labor, or
other
charges,
present or
future,
in relation to the goods, and for expenses necessary for preservation of the
goods or reasonably incurred in their sale pursuant to law. If the person on
whose account the goods are held is liable for
like
similar
charges or expenses in relation to other goods whenever deposited and it is
stated in the
warehouse
receipt or
storage agreement that a lien is claimed
for charges and expenses in relation to other goods, the
warehouseman
warehouse
also has a lien against
him
the goods
covered by the warehouse receipt or storage agreement or on the proceeds thereof
in its possession for
such
those
charges and
expenses,
whether or not the other goods have been delivered by the
warehouseman
warehouse.
But
However,
as against a person to
whom
which
a negotiable warehouse receipt is duly
negotiated,
a
warehouseman's
warehouse's
lien is limited to charges in an amount or at a rate specified
on
in
the
warehouse
receipt
or,
if no charges are so
specified,
then
to a reasonable charge for storage of the
specific
goods covered by the receipt subsequent to the date of the receipt.
(2)(b)
The
warehouseman
A
warehouse may also reserve a security
interest against the bailor for
a
the
maximum amount specified on the receipt for charges other than those specified
in subsection
(1)
(a)
of this Code section, such as for money advanced and interest.
Such
a
The
security interest is governed by
the article
on secured transactions (Article 9 of this
title).
(3)(a)(c)
A
warehouseman's
warehouse's
lien for charges and expenses under
subsection (1)
(a)
of this Code section or a security interest under subsection
(2)
(b)
of this Code section is also effective against any person
who
that
so entrusted the bailor with possession of the goods that a pledge of them by
him
the
bailor to a
good
faith
good-faith
purchaser for value would have been
valid.
but
However, the
lien or security interest is not effective
against a person
as to whom
the document confers no right in the goods covered by it under Code Section
11-7-503
that before
issuance of a document of title had a legal interest or a perfected security
interest in the goods and that did not:
(1)
Deliver or entrust the goods or any document of title covering the goods to the
bailor or the bailor's nominee with:
(A)
Actual or apparent authority to ship, store, or sell;
(B)
Power to obtain delivery under Code Section 11-7-403; or
(C)
Power of disposition under Code Section 11-2-403, subsection (2) of Code Section
11-2A-304, subsection (2) of Code Section 11-2A-305, Code Section 11-9-320, or
subsection (c) of Code Section 11-9-321 or other statute or rule of law;
or
(2)
Acquiesce in the procurement by the bailor or its nominee of any
document.
(b)(d)
A
warehouseman's
warehouse's
lien on household goods for charges and expenses in relation to the goods under
subsection
(1)
(a)
of this Code section is also effective against all persons if the depositor was
the legal possessor of the goods at the time of deposit.
'Household
In this
subsection, 'household goods' means
furniture, furnishings,
and
or
personal effects used by the depositor in a dwelling.
(4)(e)
A
warehouseman
warehouse
loses
his
its
lien on any goods
which
he
that
it voluntarily delivers or
which
he unjustifiably refuses to
deliver.
11-7-210.
Enforcement of
warehouseman's
warehouse's
lien.
(1)(a)
Except as provided in subsection
(2)
(b)
of this Code section, a
warehouseman's
warehouse's
lien may be enforced by public or private sale of the
goods,
in bloc or
in parcels
in bulk or in
packages, at any time or
place,
and on any terms
which
that
are commercially reasonable, after notifying all persons known to claim an
interest in the goods.
Such
The
notification
must
shall
include a statement of the amount due, the nature of the proposed sale, and the
time and place of any public sale. The fact that a better price could have been
obtained by a sale at a different time or in a different method from that
selected by the
warehouseman
warehouse
is not of itself sufficient to establish that the sale was not made in a
commercially reasonable manner.
If the
warehouseman either
The warehouse
sells in a commercially reasonable manner if the
warehouse sells the goods in the usual
manner in any recognized market therefor,
or if
he sells at the price current in
such
that
market at the time of
his
the
sale, or if
he has otherwise
sold
sells
in conformity with commercially reasonable practices among dealers in the type
of goods
sold, he
has sold in a commercially reasonable
manner. A sale of more goods than
apparently necessary to be offered to insure satisfaction of the obligation is
not commercially reasonable except in cases covered by the preceding
sentence.
(2)(b)
A
warehouseman's
lien
warehouse may
enforce its lien on
goods,
other than goods stored by a merchant in the course of
his
its
business, only
if the following requirements are
satisfied
may be
enforced only as follows:
(a)(1)
All persons known to claim an interest in the goods
must
shall
be notified.
(b)(2)
The
notification must be delivered in person or sent by registered letter to the
last known address of any person to be notified.
(c)
The notification
must
shall
include an itemized statement of the claim, a description of the goods subject
to the lien, a demand for payment within a specified time not less than ten days
after receipt of the notification, and a conspicuous statement that unless the
claim is paid within that time the goods will be advertised for sale and sold by
auction at a specified time and place.
(d)(3)
The sale
must
shall
conform to the terms of the notification.
(e)(4)
The sale
must
shall
be held at the nearest suitable place to
that
where the goods are held or stored.
(f)(5)
After the expiration of the time given in the notification, an advertisement of
the sale
must
shall
be published once a week for two weeks consecutively in a newspaper of general
circulation where the sale is to be held. The advertisement
must
shall
include a description of the goods, the name of the person on whose account they
are being held, and the time and place of the sale. The sale
must
shall
take place at least 15 days after the first publication. If there is no
newspaper of general circulation where the sale is to be held, the advertisement
must
shall
be posted at least ten days before the sale in not
less
fewer
than six conspicuous places in the neighborhood of the proposed
sale.
(3)(c)
Before any sale pursuant to this Code
section,
any person claiming a right in the goods may pay the amount necessary to satisfy
the lien and the reasonable expenses incurred
under
in complying
with this Code section. In that
event,
the goods
must
may
not be
sold,
but
must
shall
be retained by the
warehouseman
warehouse
subject to the terms of the receipt and this article.
(4)(d)
A warehouse
The
warehouseman may buy at any public sale
held
pursuant to this Code section.
(5)(e)
A purchaser in good faith of goods sold to enforce a
warehouseman's
warehouse's
lien takes the goods free of any rights of persons against
whom
which
the lien was valid, despite
the
warehouse's noncompliance
by the
warehouseman with
the
requirements of this Code
section.
(6)(f)
A warehouse
The
warehouseman may satisfy
his
its
lien from the proceeds of any sale pursuant to this Code section but
must
shall
hold the balance, if any, for delivery on demand to any person to
whom
he
which the
warehouse would have been bound to deliver
the goods.
(7)(g)
The rights provided by this Code section shall be in addition to all other
rights allowed by law to a creditor against
his
a
debtor.
(8)(h)
If
Where
a lien is on goods stored by a merchant in the course of
his
its
business,
the lien may be enforced in accordance with
either
subsection
(1)
(a)
or
(2)
(b)
of this Code section.
(9)(i)
A warehouse
The
warehouseman is liable for damages caused
by failure to comply with the requirements for sale under this Code section
and,
in case of willful
violation,
is liable for conversion.
Part
3
Bills of Lading: Special Provisions
Bills of Lading: Special Provisions
11-7-301.
Liability for
nonreceipt or misdescription; 'said to contain'; 'shipper's
weight,
load,
and count'; improper handling.
(1)(a)
A consignee of a nonnegotiable bill
who
of lading
which has given value in good
faith,
or a holder to
whom
which
a negotiable bill has been duly
negotiated,
relying in
either case upon the description
therein
of the
goods,
in the
bill or upon the date
therein
shown in the
bill, may recover from the issuer damages
caused by the misdating of the bill or the nonreceipt or misdescription of the
goods, except to the extent that the
document
bill
indicates that the issuer does not know whether any part or all of the goods in
fact were received or conform to the description,
such
as
where
in a case in
which the description is in terms of marks
or labels or kind, quantity, or condition or the receipt or description is
qualified by 'contents or condition of contents of packages unknown,' 'said to
contain,' 'shipper's weight, load, and count,' or
the
like
words of
similar import, if
such
that
indication
be
is
true.
(2)(b)
When
If
goods are loaded by
an
the
issuer who
is a common carrier,
of a bill of
lading:
(1)
the
The
issuer
must
shall
count the packages of goods if
package
freight
shipped in
packages and ascertain the kind and
quantity if
shipped
in bulk
freight.;
and
(2)
In
Words
such
cases
as
'shipper's weight, load, and count' or
other
words of
similar import indicating that the
description was made by the shipper are ineffective except as to
freight
goods
concealed
by
in
packages.
(3)(c)
When
If
bulk
freight
is
goods
are loaded by a shipper
who
that
makes available to the issuer
of a bill of
lading adequate facilities for weighing
such
freight, an
those goods,
the issuer
who is a
common carrier must
shall
ascertain the kind and quantity within a reasonable time after receiving the
written
shipper's
request of
the shipper to do so. In
such
cases
that
case 'shipper's weight' or
other
words of
like
purport
similar
import are ineffective.
(4)(d)
The issuer of
a bill of lading,
may
by
inserting
including
in the bill the words 'shipper's weight, load, and count' or
other
words of
like
purport
similar
import, may indicate that the goods were
loaded by the
shipper;,
and,
if
such
that
statement
be
is
true,
the issuer
shall
is
not be liable for damages caused by the improper loading.
But
their
However,
omission of
such words does not imply liability for
such
damages caused
by improper loading.
(5)(e)
A
The
shipper
shall be
deemed to have guaranteed
guarantees
to
the
an
issuer the accuracy at the time of shipment of the description, marks, labels,
number, kind, quantity, condition, and weight, as furnished by
him;
the
shipper, and the shipper shall indemnify
the issuer against damage caused by inaccuracies in
such
those
particulars.
The
This
right of
the issuer
to such indemnity
shall in no
way
does
not limit
his
the
issuer's responsibility
and
or
liability under the contract of carriage to any person other than the
shipper.
11-7-302.
Through bills of lading
and similar documents
of
title.
(1)(a)
The issuer of a through bill of
lading,
or other document
of
title embodying an undertaking to be
performed in part by
persons
a
person acting as its
agents
agent
or by
connecting
carriers
a performing
carrier, is liable to
anyone
any
person entitled to recover on the
bill or
other document for any breach by
such
the
other
persons
person
or by a
connecting
the
performing carrier of its obligation under
the bill or
other
document.
but
However,
to the extent that the bill
or other
document covers an undertaking to be
performed overseas or in territory not contiguous to the continental United
States or an undertaking including matters other than
transportation,
this liability
for breach by
the other person or the performing carrier
may be varied by agreement of the parties.
(2)(b)
Where
If
goods covered by a through bill of lading or other document
of
title embodying an undertaking to be
performed in part by
persons
a
person other than the issuer are received
by any
such
that
person,
he
the
person is
subject,
with respect to
his
its
own performance while the goods are in
his
its
possession,
to the obligation of the issuer.
His
The
person's obligation is discharged by
delivery of the goods to another
such
person pursuant to the
bill or
other
document,
and does not include liability for breach by any other
such
persons
person
or by the issuer.
(3)(c)
The issuer of
such
a
through bill of lading or other document
shall
be
of title
described in subsection (a) of this Code section
is entitled to recover from the
connecting
performing
carrier,
or
such
other person in possession of the goods when the breach of the obligation under
the bill or
other document
occurred,:
(1)
the
The
amount it may be required to pay to
anyone
any
person entitled to recover on the
bill or
other document
therefor
for the
breach, as may be evidenced by any
receipt, judgment, or transcript
thereof,
of
judgment; and
(2)
the
The
amount of any expense reasonably incurred by
it
the
issuer in defending any action
brought
commenced
by
anyone
any
person entitled to recover on the
bill or
other document
therefor
for the
breach.
11-7-303.
Diversion;
reconsignment; change of instructions.
(1)(a)
Unless the bill of lading otherwise provides,
the
a
carrier may deliver the goods to a person or destination other than that stated
in the bill or may otherwise dispose of the
goods, without
liability for misdelivery, on instructions
from:
(a)(1)
The holder of a negotiable bill;
or
(b)(2)
The consignor on a nonnegotiable
bill,
notwithstanding
even if the
consignee has given contrary instructions
from the
consignee;
or
(c)(3)
The consignee on a nonnegotiable bill in the absence of contrary instructions
from the consignor, if the goods have arrived at the billed destination or if
the consignee is in possession of the
tangible bill
or in control of the electronic bill;
or
(d)(4)
The consignee on a nonnegotiable
bill,
if
he
the
consignee is entitled as against the
consignor to dispose of
them
the
goods.
(2)(b)
Unless
such
instructions
described in
subsection (a) of this Code section are
noted
on
included
in a negotiable bill of lading, a person
to
whom
which
the bill is duly negotiated
can
may
hold the bailee according to the original terms.
11-7-304.
Bills
Tangible
bills of lading in a
set.
(1)(a)
Except
where
as
customary in
overseas
international
transportation, a
tangible
bill of lading
must
may
not be issued in a set of parts. The issuer is liable for damages caused by
violation of this subsection.
(2)(b)
If
Where
a
tangible
bill of lading is lawfully
drawn
issued
in a set of parts, each of which
is
numbered
contains an
identification code and
is
expressed to be valid only if the goods have not been delivered against any
other part, the whole of the parts
constitute
constitutes
one bill.
(3)(c)
If
Where
a tangible
negotiable bill of lading is lawfully
issued in a set of parts and different parts are negotiated to different
persons, the title of the holder to
whom
which
the first due negotiation is made prevails as to both the document
of
title and the goods even
though
if
any later holder may have received the goods from the carrier in good faith and
discharged the carrier's obligation by
surrender
of his surrendering its part.
(4)(d)
A
Any
person
who
that
negotiates or transfers a single part of a
tangible
bill of lading
drawn
issued
in a set is liable to holders of that part as if it were the whole
set.
(5)(e)
The bailee
is obliged
to
shall
deliver in accordance with Part 4 of this article against the first presented
part of a
tangible
bill of lading lawfully drawn in a set.
Such
delivery
Delivery in
this manner discharges the bailee's
obligation on the whole bill.
11-7-305.
Destination
bills.
(1)(a)
Instead of issuing a bill of lading to the consignor at the place of
shipment,
a
carrier,
may
at the request of the
consignor,
may procure the bill to be issued at
destination or at any other place designated in the request.
(2)(b)
Upon request of
anyone
any
person entitled as against the carrier to
control the goods while in transit and on surrender
of possession
or control of any outstanding bill of
lading or other receipt covering such goods, the
issuer,
subject to Code Section 11-7-105, may
procure a substitute bill to be issued at any place designated in the
request.
11-7-306.
Altered bills of
lading.
An
unauthorized alteration or filling in of a blank in a bill of lading leaves the
bill enforceable according to its original tenor.
11-7-307.
Lien of
carrier.
(1)(a)
A carrier has a lien on the goods covered by a bill of lading
or on the
proceeds thereof in its possession for
charges
subsequent
to
after
the date of
its
the
carrier's receipt of the goods for storage
or
transportation,
(including
demurrage and terminal
charges),
and for expenses necessary for preservation of the goods incident to their
transportation or reasonably incurred in their sale pursuant to law.
But
However,
against a purchaser for value of a negotiable bill of
lading,
a carrier's lien is limited to charges stated in the bill or the applicable
tariffs,
or,
if no charges are
stated,
then
to a reasonable charge.
(2)(b)
A lien for charges and expenses under subsection
(1)
(a)
of this Code section on goods
which
that
the carrier was required by law to receive for transportation is effective
against the consignor or any person entitled to the goods unless the carrier had
notice that the consignor lacked authority to subject the goods to
such
those
charges and expenses. Any other lien under subsection
(1)
(a)
of this Code section is effective against the consignor and any person
who
that
permitted the bailor to have control or possession of the goods unless the
carrier had notice that the bailor lacked
such
authority.
(3)(c)
A carrier loses
his
its
lien on any goods
which
he
that
it voluntarily delivers or
which
he unjustifiably refuses to
deliver.
11-7-308.
Enforcement of
carrier's lien.
(1)(a)
A carrier's lien
on
goods may be enforced by public or private
sale of the goods, in
bloc
bulk
or in
parcels
packages,
at any time or
place,
and on any terms
which
that
are commercially reasonable, after notifying all persons known to claim an
interest in the goods.
Such
The
notification
must
shall
include a statement of the amount due, the nature of the proposed sale, and the
time and place of any public sale. The fact that a better price could have been
obtained by a sale at a different time or in a
method
different
method
from that selected by the carrier is not of itself sufficient to establish that
the sale was not made in a commercially reasonable manner.
If
the
The
carrier
either
sells
the
goods in
the
usual
a commercially
reasonable manner
in any
recognized market therefor or if
he
the
carrier sells
the goods in
the usual manner in any recognized market therefor,
sells at the price current in
such
that
market at the time of
his
the
sale,
or if he
has otherwise
sold
sells
in conformity with commercially reasonable practices among dealers in the type
of goods sold
he has sold
in a commercially reasonable manner. A
sale of more goods than apparently necessary to be offered to ensure
satisfaction of the obligation is not commercially
reasonable,
except in cases covered by the preceding sentence.
(2)(b)
Before any sale pursuant to this Code
section,
any person claiming a right in the goods may pay the amount necessary to satisfy
the lien and the reasonable expenses incurred
under
in complying
with this Code section. In that
event,
the goods
must
may
not be
sold,
but
must
shall
be retained by the
carrier,
subject to the terms of the bill
of
lading and this article.
(3)(c)
The carrier may buy at any public sale pursuant to this Code
section.
(4)(d)
A purchaser in good faith of goods sold to enforce a carrier's lien takes the
goods free of any rights of persons against
whom
which
the lien was valid, despite
the
carrier's noncompliance
by the
carrier with
the
requirements of this Code
section.
(5)(e)
A
The
carrier may satisfy
his
its
lien from the proceeds of any sale pursuant to this Code section but
must
shall
hold the balance, if any, for delivery on demand to any person to
whom
he
which the
carrier would have been bound to deliver
the goods.
(6)(f)
The rights provided by this Code section
shall
be
are
in addition to all other rights allowed by law to a creditor against
his
a
debtor.
(7)(g)
A carrier's lien may be enforced
in
accordance with
pursuant
to either subsection
(1)
(a)
of this Code section or the procedure set forth in subsection
(2)
(b)
of Code Section 11-7-210.
(8)(h)
A
The
carrier is liable for damages caused by failure to comply with the requirements
for sale under this Code section
and,
in case of willful
violation,
is liable for conversion.
11-7-309.
Duty of care;
contractual limitation of carrier's liability.
(1)(a)
A carrier
who
that
issues a bill of
lading,
whether negotiable or
nonnegotiable,
must
shall
exercise the degree of care in relation to the goods which a reasonably careful
man
person
would exercise under
like
similar
circumstances. This subsection does not
repeal or
change
affect
any
law
statute,
regulation, or rule of law
which
that
imposes liability upon a common carrier for damages not caused by its
negligence.
(2)(b)
Damages may be limited by a
provision
term in the
bill of lading or in a transportation
agreement that the carrier's liability
shall
may
not exceed a value stated in the
document
bill or
transportation agreement if the carrier's
rates are dependent upon value and the consignor
by the
carrier's tariff is afforded an
opportunity to declare a higher value
or a value
as lawfully provided in the tariff, or where no tariff is filed
he
and the
consignor is
otherwise
advised of
such
the
opportunity;
but no such.
However, such a limitation is
not
effective with respect to the carrier's liability for conversion to its own
use.
(3)(c)
Reasonable provisions as to the time and manner of presenting claims and
instituting
commencing
actions based on the shipment may be included in a bill of lading or
tariff
a
transportation agreement.
Part
4
Warehouse receipts and bills of lading: general obligations.
Warehouse receipts and bills of lading: general obligations.
11-7-401.
Irregularities in issue
of receipt or bill or conduct of issuer.
The
obligations imposed by this article on an issuer apply to a document of title
regardless
of the fact that
even
if:
(a)(1)
The document
may
does
not comply with the requirements of this article or of any other
law
statute,
rule, or regulation regarding its
issue
issuance,
form, or content;
or
(b)(2)
The issuer
may
have violated laws regulating the conduct
of
his
its
business;
or
(c)(3)
The goods covered by the document were owned by the bailee
at the
time
when
the document was issued; or
(d)(4)
The person issuing the document
does not
come within the definition of warehouseman if
it
is not a
warehouse but the document purports to be
a warehouse receipt.
11-7-402.
Duplicate
receipt
or bill
document
of title;
overissue.
Neither
a
A
duplicate
nor
or
any other document of title purporting to cover goods already represented by an
outstanding document of the same issuer
confers
does not
confer any right in the goods, except as
provided in the case of
tangible
bills of
lading in a set
of
parts, overissue of documents for fungible
goods,
and
substitutes for lost, stolen, or destroyed
documents, or
substitute documents issued pursuant to Code Section
11-7-105.
But
the
The
issuer is liable for damages caused by
his
its
overissue or failure to identify a duplicate document
as
such by
a
conspicuous notation
on its
face.
11-7-403.
Obligation of
warehouseman
or carrier
bailee
to deliver; excuse.
(1)(a)
A
The
bailee
must
shall
deliver the goods to a person entitled under
the
a
document
who
of title if
the person complies with subsections
(2)
(b)
and
(3)
(c)
of this Code section, unless and to the extent that the bailee establishes any
of the following:
(a)(1)
Delivery of the goods to a person whose receipt was rightful as against the
claimant;
(b)(2)
Damage to or delay, loss, or destruction of the goods for which the bailee is
not liable;
(c)(3)
Previous sale or other disposition of the goods in lawful enforcement of a lien
or on
warehouseman's
a
warehouse's lawful termination of
storage;
(d)(4)
The exercise by a seller of
his
its
right to stop delivery pursuant to
the
provisions of the article on sales (Code
Section
11-2-705)
or by a lessor
of its right to stop delivery pursuant to Code Section
11-2A-526;
(e)(5)
A diversion, reconsignment, or other disposition pursuant to
the
provisions of this article (Code Section
11-7-303)
or tariff regulating such
right;
(f)(6)
Release, satisfaction, or any other
fact
affording a personal defense against the
claimant;
or
(g)(7)
Any other lawful excuse.
(2)(b)
A person claiming goods covered by a document of title
must
shall
satisfy the bailee's lien
where
if
the bailee so requests or
where
if
the bailee is prohibited by law from delivering the goods until the charges are
paid.
(3)(c)
Unless
the
a
person claiming
the
goods is
one
a
person against
whom
which
the document
confers
no
of title does
not confer a right under
subsection (a)
of Code Section
11-7-503(1),:
(1)
The person claiming under a document shall
he
must surrender
for
cancellation or notation
possession or
control of any outstanding negotiable document covering the goods for
cancellation or indication of partial deliveries; and
(2)
of partial
deliveries any outstanding negotiable document covering the goods, and
the
The
bailee
must
shall
cancel the document or conspicuously
note
indicate in
the document the partial delivery
thereon
or
be
the bailee
is liable to any person to
whom
which
the document is duly negotiated.
(4)
'Person entitled under the document' means holder in the case of a negotiable
document, or the person to whom delivery is to be made by the terms of or
pursuant to written instructions under a nonnegotiable document.
11-7-404.
No liability for
good
faith
good-faith
delivery pursuant to
receipt
or bill
document
of title.
A
bailee
who
that
in good faith
including
observance of reasonable commercial
standards has received goods and delivered
or otherwise disposed of
them
the
goods according to the terms of the
document of title or pursuant to this article is not liable
therefor.
This rule applies
for the
goods even
though
if:
(1)
The
the
person from
whom
he
which the
bailee received the goods
had
no
did not
have authority to procure the document or
to dispose of the goods
and;
or
(2)
The
even though
the person to
whom
he
which the
bailee delivered the goods
had
no
did not
have authority to receive
them
the
goods.
Part
5
Warehouse receipts and bills of lading: negotiation and transfer
Warehouse receipts and bills of lading: negotiation and transfer
11-7-501.
Form of negotiation and
requirements of
'due
Negotiation
negotiation.'
(1)(a)
The following rules apply to a negotiable tangible document of
title:
(1)
If the document's original terms run
A
negotiable document of title running to
the order of a named
person, the
document is negotiated by
his
the named
person's indorsement and delivery. After
his
the named
person's indorsement in blank or to
bearer,
any person
can
may
negotiate
it
the
document by delivery
alone.;
(2)(a)
A negotiable document of title is also negotiated by delivery alone when by its
original
If the
document's original terms
it
runs
run
to bearer, it
is negotiated by delivery
alone;.
(b)(3)
If the document's original terms run
When a
document running to the order of a named
person and
it is delivered to
him
the named
person, the effect is the same as if the
document had been
negotiated;.
(3)(4)
Negotiation of
a
negotiable
the
document of
title after it has been indorsed to a
specified
named
person requires indorsement by the
special
indorsee as well as
named person
and
delivery;
and.
(4)(5)
A
negotiable
document of
title is
'duly
negotiated'
when
if
it is negotiated in the manner stated in this
Code
section
subsection
to a holder
who
that
purchases it in good
faith,
without notice of any defense against or claim to it on the part of any
person,
and for value, unless it is established that the negotiation is not in the
regular course of business or financing or involves receiving the document in
settlement or payment of a money obligation.
(b)
The following rules apply to a negotiable electronic document of
title:
(1)
If the document's original terms run to the order of a named person or to
bearer, the document is negotiated by delivery of the document to another
person. Indorsement by the named person is not required to negotiate the
document;
(2)
If the document's original terms run to the order of a named person and the
named person has control of the document, the effect is the same as if the
document had been negotiated; and
(3)
A document is duly negotiated if it is negotiated in the manner stated in this
subsection to a holder that purchases it in good faith, without notice of any
defense against or claim to it on the part of any person, and for value, unless
it is established that the negotiation is not in the regular course of business
or financing or involves taking delivery of the document in settlement or
payment of a monetary obligation.
(5)(c)
Indorsement of a nonnegotiable document
of
title neither makes it negotiable nor adds
to the transferee's rights.
(6)(d)
The naming in a negotiable bill
of
lading of a person to be notified of the
arrival of the goods does not limit the negotiability of the bill
nor
or
constitute notice to a purchaser
thereof
of the
bill of any interest of
such
that
person in the goods.
11-7-502.
Rights acquired by due
negotiation.
(1)(a)
Subject to Code
Section
Sections
11-7-205 and 11-7-503
and to the
provisions of Code Section 11-7-205 on fungible
goods, a holder to
whom
which
a negotiable document of title has been duly negotiated acquires
thereby:
(a)(1)
Title to the document;
(b)(2)
Title to the goods;
(c)(3)
All rights accruing under the law of agency or estoppel, including rights to
goods delivered to the bailee after the document was issued; and
(d)(4)
The direct obligation of the issuer to hold or deliver the goods according to
the terms of the document free of any defense or claim by
him
the
issuer except those arising under the
terms of the document or under this
article, but
in
.
In the case of a delivery
order,
the bailee's obligation accrues only upon
the
bailee's acceptance
of the
delivery order and the obligation acquired
by the holder is that the issuer and any indorser will procure the acceptance of
the bailee.
(2)(b)
Subject to Code Section 11-7-503, title and rights so acquired
by due
negotiation are not defeated by any
stoppage of the goods represented by the document
of
title or by surrender of
such
the
goods by the
bailee,
and are not impaired even
though
the
if:
(1)
The due negotiation or any prior
due
negotiation constituted a breach of duty
or even
though
any;
(2)
Any person has been deprived of possession
of
the
a negotiable
tangible document
or control of
a negotiable electronic document by
misrepresentation, fraud, accident, mistake, duress, loss, theft, or
conversion,;
or
(3)
A
even though
a previous sale or other transfer of the
goods or document has been made to a third person.
11-7-503.
Document of title to
goods defeated in certain cases.
(1)(a)
A document of title confers no right in goods against a person
who
that
before issuance of the document had a legal interest or a perfected security
interest in
them
the
goods and
who
neither
that did
not:
(a)(1)
Delivered
or entrusted them
Deliver or
entrust the goods or any document of title
covering
them
the
goods to the bailor or the bailor's
nominee
with:
(A)
actual
Actual
or apparent authority to ship, store, or
sell;
(B)
or with
power
Power
to obtain delivery under
this
article (Code Section
11-7-403);
or
(C)
with
power
Power
of disposition under
this title
(Code
Sections
Section
11-2-403,
subsection (2) of Code Section 11-2A-304, subsection (2) of Code Section
11-2A-305,
and
Code
Section
11-9-320),
or subsection (c) of Code Section 11-9-321
or other statute or rule of law;
nor
or
(b)(2)
Acquiesced
Acquiesce
in the procurement by the bailor or
the
bailor's
its
nominee of any document
of
title.
(2)(b)
Title to goods based upon an unaccepted delivery order is subject to the rights
of
anyone
any
person to
whom
which
a negotiable warehouse receipt or bill of lading covering the goods has been
duly negotiated.
Such
a
That
title may be defeated under Code Section 11-7-504 to the same extent as the
rights of the issuer or a transferee from the issuer.
(3)(c)
Title to goods based upon a bill of lading issued to a freight forwarder is
subject to the rights of
anyone
any
person to
whom
which
a bill issued by the freight forwarder is duly
negotiated;
but.
However, delivery by the carrier in
accordance with Part 4 of this article pursuant to its own bill of lading
discharges the carrier's obligation to deliver.
11-7-504.
Rights acquired in the
absence of due negotiation; effect of diversion;
seller's
stoppage of delivery.
(1)(a)
A transferee of a document
of
title, whether negotiable or
nonnegotiable, to
whom
which
the document has been delivered but not duly negotiated, acquires the title and
rights
which
his
that
its transferor had or had actual authority
to convey.
(2)(b)
In the case of
a transfer of a nonnegotiable document
of
title, until but not after the bailee
receives
notification
notice
of the transfer, the rights of the transferee may be defeated:
(a)(1)
By those creditors of the transferor
who
which
could treat the
sale
transfer
as void under Code Section 11-2-402
or
11-2A-308;
or
(b)(2)
By a buyer from the transferor in ordinary course of business if the bailee has
delivered the goods to the buyer or received notification of
his
the
buyer's rights;
or
(c)(3)
By a lessee from the transferor in ordinary course of business if the bailee has
delivered the goods to the lessee or received notification of the lessee's
rights; or
(4)
As against the
bailee,
by good
faith
good-faith
dealings of the bailee with the transferor.
(3)(c)
A diversion or other change of shipping instructions by the consignor in a
nonnegotiable bill of lading which causes the bailee not to deliver
the
goods to the consignee defeats the
consignee's title to the goods if
they
the
goods have been delivered to a buyer in
ordinary course of business
or a lessee in
ordinary course of business
and,
in any
event,
defeats the consignee's rights against the bailee.
(4)(d)
Delivery of
the goods pursuant to a nonnegotiable
document of
title may be stopped by a seller under
Code Section 11-2-705
or a lessor
under Code Section 11-2A-526,
and
subject to the
requirement
requirements
of due notification
there
provided in those Code sections. A bailee
honoring
that
honors the seller's
or
lessor's instructions is entitled to be
indemnified by the seller
or
lessor against any resulting loss or
expense.
11-7-505.
Indorser not
a
guarantor for other parties.
The
indorsement of a
tangible
document of title issued by a bailee does not make the indorser liable for any
default by the bailee or
by
previous indorsers.
11-7-506.
Delivery without
indorsement; right to compel indorsement.
The
transferee of a negotiable
tangible
document of title has a specifically enforceable right to have
his
its
transferor supply any necessary
indorsement,
but the transfer becomes a negotiation only as of the time the indorsement is
supplied.
11-7-507.
Warranties on
negotiation or
transfer
of receipt or bill
delivery
of document of
title.
Where
If
a person negotiates or
transfers
delivers
a document of title for
value,
otherwise than as a mere intermediary under Code Section 11-7-508,
then
unless otherwise
agreed,
he
the
transferor, in addition to any warranty made in selling or leasing the
goods, warrants to
his
its
immediate purchaser only
in addition
to any warranty made in selling the goods
that:
(a)(1)
The
That
the document is genuine;
and
(b)(2)
The transferor does not have
That he has
no knowledge of any fact
which
that
would impair
its
the
document's validity or worth;
and
(c)(3)
The
That
his negotiation or
transfer
delivery
is rightful and fully effective with respect to the title to the document and
the goods it represents.
11-7-508.
Warranties of
collecting bank as to documents
of
title.
A
collecting bank or other intermediary known to be entrusted with documents
of
title on behalf of another or with
collection of a draft or other claim against delivery of documents warrants by
such
the
delivery of the documents only its own good faith and
authority.
This rule applies even
though
if
the collecting
bank or other intermediary has purchased
or made advances against the claim or draft to be collected.
11-7-509.
Receipt
or bill: when adequate
Adequate
compliance with commercial contract.
The
question whether
Whether
a document of
title is adequate to fulfill the
obligations of a contract for
sale, a
contract for lease, or the conditions of a
letter
of credit is
governed
determined
by the
articles on sales (Article
2, 2A, or
5 of this
title) and
on letters of credit (Article 5 of this
title).
Part
6
Warehouse receipts and bills of lading: miscellaneous provisions
Warehouse receipts and bills of lading: miscellaneous provisions
11-7-601.
Lost,
and
missing
stolen,
or destroyed documents
of
title.
(1)(a)
If a document
has
been
of title
is lost, stolen, or destroyed, a court may
order delivery of the goods or issuance of a substitute document and the bailee
may without liability to any person comply with
such
the
order. If the document was
negotiable, a
court may not order delivery of the goods or the issuance of a substitute
document without the
claimant
must post
claimant's
posting security
approved by
the court to indemnify any
unless it
finds that any person
who
that
may suffer loss as a result of nonsurrender
of possession
or control of the document
is adequately
protected against the loss. If the
document was
not
negotiable
nonnegotiable,
such
security
the
court may
be required
at the discretion of the court
require
security. The court may also
in its
discretion order payment of the bailee's
reasonable costs and
counsel
attorney's
fees in any
action under this subsection.
(2)(b)
A bailee
who
that,
without
a
court
order,
delivers goods to a person claiming under a missing negotiable document
of
title is liable to any person injured
thereby,
and if.
If the delivery is not in good
faith, the
bailee is
becomes
liable for conversion. Delivery in good faith is not conversion if
made in
accordance with a filed classification or tariff or, where no classification or
tariff is filed, if the claimant posts
security with the bailee in an amount at least double the value of the goods at
the time of posting to indemnify any person injured by the delivery
who
which
files a notice of claim within one year after the delivery.
11-7-602.
Attachment
of
Judicial
process against goods
covered by
a
negotiable document
of
title.
Except
where the
Unless
a document
of
title was originally issued upon delivery
of the goods by a person
who had
no
that did not
have power to dispose of them,
no
a
lien
attaches
does not
attach by virtue of any judicial process
to goods in the possession of a bailee for which a negotiable document of title
is outstanding unless
possession or
control of the document
be
is
first surrendered to the bailee or
its
the
document's negotiation
is
enjoined.,
and the
The
bailee
shall
may
not be compelled to deliver the goods pursuant to process until
possession or
control of the document is surrendered to
him or
impounded by
the bailee or
to the court.
One who
purchases
A purchaser
of the document for value without notice
of the process or injunction takes free of the lien imposed by judicial
process.
11-7-603.
Conflicting claims;
interpleader.
If
more than one person claims title
to
or possession of the goods, the bailee is excused from delivery until
he
the
bailee has
had
a reasonable time to ascertain the validity of the adverse claims or to
bring
commence
an action
to compel
all claimants to interplead and may compel
such
for
interpleader,.
The bailee may assert an interpleader
either in defending an action for nondelivery of the
goods,
or by original
action,
whichever is
appropriate."
PART
II
SECTION 2-1.
SECTION 2-1.
Said
title is further amended by revising paragraphs (5), (6), (10), (14), (15),
(20), (25), (26), (27), (38), and (45) of Code Section 11-1-201, relating to
general definitions, as follows:
"(5)
'Bearer' means
the
a person in
control of a negotiable electronic document of title or
a person in possession of an instrument,
a negotiable
tangible document of title, or
a
certificated security payable to bearer or indorsed in blank.
(6)
'Bill of lading' means a document
of
title evidencing the receipt of goods for
shipment issued by a person engaged in the business of
directly or
indirectly transporting or forwarding
goods, and
includes an airbill. 'Airbill' means a document serving for air transportation
as a bill of lading does for marine or rail transportation, and includes an air
consignment note or air waybill.
The term does
not include a warehouse
receipt."
"(10)
'Conspicuous':
A term or clause is conspicuous when it
is,' with
reference to a term, means so
written,
displayed, or presented that a reasonable
person against
whom
which
it is to operate ought to have noticed it.
A printed
heading in capitals (as: Nonnegotiable Bill of Lading) is conspicuous. Language
in the body of a form is 'conspicuous' if it is in larger or other contrasting
type or color. But in a telegram any stated term is 'conspicuous.'
Whether a term
or
clause is 'conspicuous' or not is
for
a
decision
by
for
the court.
Conspicuous
terms include the following:
(A)
A heading in capitals equal to or greater in size than the surrounding text, or
in contrasting type, font, or color to the surrounding text of the same or
lesser size; and
(B)
Language in the body of a record or display in larger type than the surrounding
text, or in contrasting type, font, or color to the surrounding text of the same
size, or set off from the surrounding text of the same size by symbols or other
marks that call attention to the
language."
"(14)
'Delivery' with respect
to an
electronic document of title means voluntary transfer of control and with
respect to instruments,
tangible
documents of title, chattel paper, or certificated securities means voluntary
transfer of possession.
(15)
'Document of title'
includes
bill of lading, dock warrant, dock receipt, warehouse receipt or order for the
delivery of goods, and also any other document
which
means a record
(a) that in the regular course of business
or financing is treated as adequately evidencing that the person in possession
or
control of
it
the
record is entitled to receive,
control,
hold, and dispose of the
document
record
and the goods
it
the
record covers
and (b) that
purports to be issued by or addressed to a bailee and to cover goods in the
bailee's possession which are either identified or are fungible portions of an
identified mass. The term includes a bill of lading, transport document, dock
warrant, dock receipt, warehouse receipt, and order for delivery of
goods.
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 which are either
identified or are fungible portions of an identified
mass
An electronic
document of title means a document of title evidenced by a record consisting of
information stored in an electronic medium. A tangible document of title means
a document of title evidenced by a record consisting of information that is
inscribed on a tangible
medium."
"(20)
'Holder,'
with
respect to a negotiable instrument,
means:
(a)
the
The
person in possession
if
the
of a
negotiable instrument
that
is payable
either
to bearer
or, in the
case of an instrument payable to an
identified
person, if
the identified
that is
the person
is
in
possession.
Holder with respect
to;
(b)
The person in possession of a
negotiable
tangible document of title
means the
person in possession if the goods are
deliverable
either
to bearer or to the order of the person in
possession;
or
(c)
The person in control of a negotiable electronic document of
title."
"(25)
A
Subject to
subsection (27) of this Code section, a
person has 'notice' of a fact
when
if the
person:
(a)
He
has
Has
actual knowledge of it;
or
(b)
He
has
Has
received a notice or notification of it; or
(c)
From all the facts and circumstances known to
him
the
person at the time in
question,
he
has reason to know that it exists.
A
person 'knows' or has 'knowledge' of a fact when
he
the
person has actual knowledge of it.
'Discover' or 'learn' or a word or phrase of similar import refers to knowledge
rather than to reason to know. The time and circumstances under which a notice
or notification may cease to be effective are not determined by this
title.
(26)
A person 'notifies' or 'gives' a notice or notification to another
person
by taking such steps as may be reasonably required to inform the other
person
in ordinary
course,
whether or not
such
other
the other
person actually comes to know of it.
A
Subject to
subsection (27) of this Code section,
a person 'receives' a notice or
notification when:
(a)
It comes to
his
that
person's attention; or
(b)
It is duly delivered
in a form
reasonable under the circumstances at the
place of business through which the contract was made or at
any other
place
another
location held out by
him
that
person as the place for receipt of such
communications.
(27)
Notice, knowledge, or a notice or notification received by an organization is
effective for a particular transaction from the time when it is brought to the
attention of the individual conducting that transaction, and in any
event,
from the time when it would have been brought to
his
the
individual's attention if the organization
had exercised due diligence.
An
organization exercises due diligence if it maintains reasonable routines for
communicating significant information to the person conducting the transaction
and there is reasonable compliance with the routines. Due diligence does not
require an individual acting for the organization to communicate information
unless such communication is part of the individual's regular duties or the
individual has reason to know of the transaction and that the transaction would
be materially affected by the
information."
"(38)
'Send' in connection with
any
a
writing,
record, or notice
means:
(a)
to
To
deposit in the mail or deliver for transmission by any other usual means of
communication with postage or cost of transmission provided for and properly
addressed
and,
in the case of an
instrument,
to an address specified thereon or otherwise agreed, or if there be none to any
address reasonable under the
circumstances.;
or
(b)
The receipt
of any writing
In any other
way to cause to be received any record or
notice within the time
at
which it would have arrived if properly
sent has
the effect of a proper
sending."
"(45)
'Warehouse receipt' means a
receipt
document of
title issued by a person engaged in the
business of storing goods for hire."
SECTION
2-2.
Said
title is further amended by revising subsection (3) of Code Section 11-2-103,
relating to definitions and index of definitions regarding sales, as
follows:
"(3)
The
'Control' as
provided in Code Section 11-7-106 and the
following definitions in other articles of this title apply to this
article:
'Check.'
Code Section 11-3-104.
'Consignee.'
Code Section 11-7-102.
'Consignor.'
Code Section 11-7-102.
'Consumer
goods.' Code Section 11-9-102.
'Dishonor.'
Code Section 11-3-502.
'Draft.'
Code Section 11-3-104."
SECTION
2-3.
Said
title is further amended by revising subsection (2) of Code Section 11-2-104,
relating to definition of financing agency, as follows:
"(2)
'Financing agency' means a bank, finance company, or other person who in the
ordinary course of business makes advances against goods or documents of title
or who by arrangement with either the seller or the buyer intervenes in ordinary
course to make or collect payment due or claimed under the contract for sale, as
by purchasing or paying the seller's draft or making advances against it or by
merely taking it for collection whether or not documents of title accompany
or are
associated with the draft. 'Financing
agency' includes also a bank or other person who similarly intervenes between
persons who are in the position of seller and buyer in respect to the goods
(Code Section 11-2-707)."
SECTION
2-4.
Said
title is further amended by revising Code Section 11-2-310, relating to open
time for payment or running of credit, as follows:
"11-2-310.
Open time for payment
or running of credit; authority to ship under reservation.
Unless
otherwise agreed:
(a)
Payment is due at the time and place at which the buyer is to receive the goods
even though the place of shipment is the place of delivery; and
(b)
If the seller is authorized to send the goods he
or
she may ship them under reservation, and
may tender the documents of title, but the buyer may inspect the goods after
their arrival before payment is due unless such inspection is inconsistent with
the terms of the contract (Code Section 11-2-513); and
(c)
If delivery is authorized and made by way of documents of title otherwise than
by subsection (b) of this Code section then payment is due
regardless of
where the goods are to be received (i) at
the time and place at which the buyer is to receive
delivery
of the
tangible
documents
regardless
of where the goods are to be received
or (ii) at the
time the buyer is to receive delivery of the electronic documents and at the
seller's place of business or if none, the seller's
residence; and
(d)
Where the seller is required or authorized to ship the goods on credit the
credit period runs from the time of shipment but
postdating
post-dating
the invoice or delaying its dispatch will correspondingly delay the starting of
the credit period."
SECTION
2-5.
Said
title is further amended by revising Code Section 11-2-323, relating to form of
bill of lading required in overseas shipment, as follows:
"11-2-323.
Form of bill of lading
required in overseas shipment; 'overseas.'
(1)
Where the contract contemplates overseas shipment and contains a term C.I.F. or
C. & F. or F.O.B. vessel, the seller unless otherwise agreed
must
shall
obtain a negotiable bill of lading stating that the goods have been loaded
on
in
board or, in the case of a term C.I.F. or C. & F., received for
shipment.
(2)
Where in a case within subsection (1) of this Code section a
tangible
bill of lading has been issued in a set of parts, unless otherwise agreed if the
documents are not to be sent from abroad the buyer may demand tender of the full
set; otherwise only one part of the bill of lading need be tendered. Even if
the agreement expressly requires a full set:
(a)
Due tender of a single part is acceptable within the provisions of this article
on cure of improper delivery (subsection (1) of Code Section 11-2-508);
and
(b)
Even though the full set is demanded, if the documents are sent from abroad the
person tendering an incomplete set may nevertheless require payment upon
furnishing an indemnity which the buyer in good faith deems
adequate.
(3)
A shipment by water or by air or a contract contemplating such shipment is
'overseas' insofar as by usage of trade or agreement it is subject to the
commercial, financing, or shipping practices characteristic of international
deep water commerce."
SECTION
2-6.
Said
title is further amended by revising Code Section 11-2-401, relating to passing
of title and reservation of security, as follows:
"11-2-401.
Passing of title;
reservation for security; limited application of this Code section.
Each
provision of this article with regard to the rights, obligations, and remedies
of the seller, the buyer, purchasers, or other third parties applies
irrespective of title to the goods except where the provision refers to such
title. Insofar as situations are not covered by the other provisions of this
article and matters concerning title become material the following rules
apply:
(1)
Title to goods cannot pass under a contract for sale prior to their
identification to the contract (Code Section 11-2-501), and unless otherwise
explicitly agreed the buyer acquires by their identification a special property
as limited by this title. Any retention or reservation by the seller of the
title (property) in goods shipped or delivered to the buyer is limited in effect
to a reservation of a security interest. Subject to these provisions and to the
provisions of the article on secured transactions (Article 9 of this title),
title to goods passes from the seller to the buyer in any manner and on any
conditions explicitly agreed on by the parties.
(2)
Unless otherwise explicitly agreed title passes to the buyer at the time and
place at which the seller completes his
or
her performance with reference to the
physical delivery of the goods, despite any reservation of a security interest
and even though a document of title is to be delivered at a different time or
place; and in particular and despite any reservation of a security interest by
the bill of lading:
(a)
If the contract requires or authorizes the seller to send the goods to the buyer
but does not require him
or
her to deliver them at destination, title
passes to the buyer at the time and place of shipment; but
(b)
If the contract requires delivery at destination, title passes on tender
there.
(3)
Unless otherwise explicitly agreed where delivery is to be made without moving
the
goods:
(a)
If the seller is to deliver a
tangible
document of title, title passes at the time when and the place where he
or
she delivers such documents
and if the
seller is to deliver an electronic document of title, title passes when the
seller delivers the document;
or
(b)
If the goods are at the time of contracting already identified and no documents
of
title are to be delivered, title passes at
the time and place of contracting.
(4)
A rejection or other refusal by the buyer to receive or retain the goods,
whether or not justified, or a justified revocation of acceptance revests title
to the goods in the seller. Such revesting occurs by operation of law and is
not a 'sale.'"
SECTION
2-7.
Said
title is further amended by revising subsections (4) and (5) of Code Section
11-2-503, relating to manner of seller's tender of delivery, as
follows:
"(4)
Where goods are in the possession of a bailee and are to be delivered without
being moved:
(a)
Tender requires that the seller either tender a negotiable document of title
covering such goods or procure acknowledgment by the bailee of the buyer's right
to possession of the goods; but
(b)
Tender to the buyer of a nonnegotiable document of title or of a
written
direction to
record
directing the bailee to deliver is
sufficient tender unless the buyer seasonably objects, and
except as
otherwise provided in Article 9 of this
title receipt by the bailee of
notification of the buyer's rights fixes those rights as against the bailee and
all third persons; but risk of loss of the goods and of any failure by the
bailee to honor the nonnegotiable document of title or to obey the direction
remains on the seller until the buyer has had a reasonable time to present the
document or direction, and a refusal by the bailee to honor the document or to
obey the direction defeats the tender.
(5)
Where the contract requires the seller to deliver documents:
(a)
He
must
or she
shall tender all such documents in correct
form, except as provided in this article with respect to bills of lading in a
set (subsection (2) of Code Section 11-2-323); and
(b)
Tender through customary banking channels is sufficient and dishonor of a draft
accompanying
or associated
with the documents constitutes
nonacceptance or rejection."
SECTION
2-8.
Said
title is further amended by revising Code Section 11-2-505, relating to seller's
shipment under reservation, as follows:
"11-2-505.
Seller's shipment under
reservation.
(1)
Where the seller has identified goods to the contract by or before
shipment:
(a)
His or
her procurement of a negotiable bill of
lading to his
or
her own order or otherwise reserves in him
or
her a security interest in the goods. His
or
her procurement of the bill to the order
of a financing agency or of the buyer indicates in addition only the seller's
expectation of transferring that interest to the person named.
(b)
A nonnegotiable bill of lading to himself
or
herself or his
or
her nominee reserves possession of the
goods as security but except in a case of conditional delivery (subsection (2)
of Code Section 11-2-507) a nonnegotiable bill of lading naming the buyer as
consignee reserves no security interest even though the seller retains
possession or
control of the bill of
lading.
(2)
When shipment by the seller with reservation of a security interest is in
violation of the contract for sale it constitutes an improper contract for
transportation within Code Section 11-2-504 but impairs neither the rights given
to the buyer by shipment and identification of the goods to the contract nor the
seller's powers as a holder of a negotiable document
of
title."
SECTION
2-9.
Said
title is further amended by revising subsection (2) of Code Section 11-2-506,
relating to rights of financing agency, as follows:
"(2)
The right to reimbursement of a financing agency which has in good faith honored
or purchased the draft under commitment to or authority from the buyer is not
impaired by subsequent discovery of defects with reference to any relevant
document which was apparently regular
on its
face."
SECTION
2-10.
Said
title is further amended by revising subsection (2) of Code Section 11-2-509,
relating to risk of loss in the absence of breach, as follows:
"(2)
Where the goods are held by a bailee to be delivered without being moved, the
risk of loss passes to the buyer:
(a)
On his or
her receipt of
possession or
control of a negotiable document of title
covering the goods; or
(b)
On acknowledgment by the bailee of the buyer's right to possession of the goods;
or
(c)
After his or
her receipt of
possession or
control of a nonnegotiable document of
title or other
written
direction to deliver
in a
record, as provided in subsection (4)(b)
of Code Section 11-2-503."
SECTION
2-11.
Said
title is further amended by revising subsection (2) of Code Section 11-2-605,
relating to waiver of buyer's objections by failure to particularize, as
follows:
"(2)
Payment against documents made without reservation of rights precludes recovery
of the payment for defects apparent
on the face
of
in
the documents."
SECTION
2-12.
Said
title is further amended by revising subsections (2) and (3) of Code Section
11-2-705, relating to seller's stoppage of delivery in transit or otherwise, as
follows:
"(2)
As against such buyer the seller may stop delivery until:
(a)
Receipt of the goods by the buyer; or
(b)
Acknowledgment to the buyer by any bailee of the goods except a carrier that the
bailee holds the goods for the buyer; or
(c)
Such acknowledgment to the buyer by a carrier by reshipment or as
warehouseman
a
warehouse; or
(d)
Negotiation to the buyer of any negotiable document of title covering the
goods.
(3)(a)
To stop delivery the seller
must
shall
so notify as to enable the bailee by reasonable diligence to prevent delivery of
the goods.
(b)
After such notification the bailee
must
shall
hold and deliver the goods according to the directions of the seller but the
seller is liable to the bailee for any ensuing charges or damages.
(c)
If a negotiable document of title has been issued for goods the bailee is not
obliged to obey a notification to stop until surrender
of possession
or control of the document.
(d)
A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a
notification to stop received from a person other than the
consignor."
SECTION
2-13.
Said
title is further amended by revising paragraphs (a) and (o) of subsection (1) of
Code Section 11-2A-103, relating to definitions and index of definitions
relating to leases, as follows:
"(a)
'Buyer in ordinary course of business' means a person
who,
in good faith and without knowledge that the sale to him
or
her is in violation of the ownership
rights or security interest or leasehold interest of a third party in the
goods,
buys in ordinary course from a person in the business of selling goods of that
kind,
but does not include a pawnbroker. 'Buying' may be for cash or by exchange of
other property or on secured or unsecured credit and includes
receiving
acquiring
goods or documents of title under a pre-existing contract for
sale,
but does not include a transfer in bulk or as security for or in total or
partial satisfaction of a money debt."
"(o)
'Lessee in ordinary course of business' means a person
who,
in good faith and without knowledge that the lease to him
or
her is in violation of the ownership
rights or security interest or leasehold interest of a third party in the
goods,
leases in ordinary course from a person in the business of selling or leasing
goods of that
kind,
but does not include a pawnbroker. 'Leasing' may be for cash or by exchange of
other property or on secured or unsecured credit and includes
receiving
acquiring
goods or documents of title under a pre-existing lease
contract,
but does not include a transfer in bulk or as security for or in total or
partial satisfaction of a money debt."
SECTION
2-14.
Said
title is further amended by revising subsection (2) of Code Section 11-2A-514,
relating to waiver of lessee's objections, as follows:
"(2)
A lessee's failure to reserve rights when paying rent or other consideration
against documents precludes recovery of the payment for defects apparent
on the face
of
in
the documents."
SECTION
2-15.
Said
title is further amended by revising subsection (2) of Code Section 11-2A-526,
relating to lessor's stoppage of delivery in transit or otherwise, as
follows:
"(2)
In pursuing its remedies under subsection (1)
of this Code
section, the lessor may stop delivery
until:
(a)
Receipt of the goods by the lessee;
(b)
Acknowledgment to the lessee by any bailee of the goods, except a carrier, that
the bailee holds the goods for the lessee; or
(c)
Such an acknowledgment to the lessee by a carrier via reshipment or as
warehouseman
a
warehouse."
SECTION
2-16.
Said
title is further amended by revising subsection (c) of Code Section 11-4-104,
relating to definitions and index of definitions relating to bank deposits and
collections, as follows:
"(c)
The
'Control' as
provided in Code Section 11-7-106 and the
following definitions in other articles of this title apply to this
article:
'Acceptance.'
Code Section 11-3-409.
'Alteration.'
Code Section 11-3-407.
'Cashier's
check.' Code Section 11-3-104.
'Certificate
of deposit.' Code Section 11-3-104.
'Certified
check.' Code Section 11-3-409.
'Check.'
Code Section 11-3-104.
'Good
faith.' Code Section 11-3-103.
'Holder
in due course.' Code Section 11-3-302.
'Instrument.'
Code Section 11-3-104.
'Notice
of dishonor.' Code Section 11-3-503.
'Order.'
Code Section 11-3-103.
'Ordinary
care.' Code Section 11-3-103.
'Person
entitled to enforce.' Code Section 11-3-301.
'Presentment.'
Code Section 11-3-501.
'Promise.'
Code Section 11-3-103.
'Prove.'
Code Section 11-3-103.
'Teller's
check.' Code Section 11-3-104.
'Unauthorized
signature.' Code Section 11-3-403."
SECTION
2-17.
Said
title is further amended by revising Code Section 11-4-210, relating to security
interest of collecting bank in items, accompanying documents, and proceeds, as
follows:
"11-4-210.
Security interest of
collecting bank in items, accompanying documents, and proceeds.
(a)
A collecting bank has a security interest in an item and any accompanying
documents or the proceeds of either:
(1)
In case of an item deposited in an account, to the extent to which credit given
for the item has been withdrawn or applied;
(2)
In case of an item for which it has given credit available for withdrawal as of
right, to the extent of the credit
given,
whether or not the credit is drawn upon or there is a right of charge-back;
or
(3)
If it makes an advance on or against the item.
(b)
If credit given for several items received at one time or pursuant to a single
agreement is withdrawn or applied in part, the security interest remains upon
all the items, any accompanying documents, or the proceeds of either. For the
purpose of this Code section, credits first given are first
withdrawn.
(c)
Receipt by a collecting bank of a final settlement for an item is a realization
on its security interest in the item, accompanying documents, and proceeds. So
long as the bank does not receive final settlement for the item or give up
possession of the item or
possession or
control of the accompanying documents for
purposes other than collection, the security interest continues to that extent
and is subject to Article 9 of this title, but:
(1)
No security agreement is necessary to make the security interest enforceable
(subparagraph (b)(3)(A) of Code Section 11-9-203);
(2)
No filing is required to perfect the security interest; and
(3)
The security interest has priority over conflicting perfected security interests
in the item, accompanying documents, or proceeds."
SECTION
2-18.
Said
title is further amended by revising Code Section 11-8-103, relating to rules
for determining whether certain obligations and interests are securities or
financial assets, by adding a new subsection (g) to read as
follows:
"(g)
A document of title is not a financial asset unless subparagraph (a)(9)(iii) of
Code Section 11-8-102
applies."
SECTION
2-19.
Said
title is further amended by revising subsection (b) of Code
Section 11-9-102, relating to definitions and index of definitions relating
to secured transactions, as follows:
"(b)
Definitions in other
articles.
Other
definitions applying to this article and the Code sections in which they appear
are
'Control' as
provided in Code Section 11-7-106 and the following definitions in other
articles apply to this
article:
'Applicant.'
Code Section 11-5-102.
'Beneficiary.'
Code Section 11-5-102.
'Broker.'
Code Section 11-8-102.
'Certificated
security.' Code Section 11-8-102.
'Check.'
Code Section 11-3-104.
'Clearing
corporation.' Code Section 11-8-102.
'Contract
for sale.' Code Section 11-2-106.
'Customer.'
Code Section 11-4-104.
'Entitlement
holder.' Code Section 11-8-102.
'Financial
asset.' Code Section 11-8-102.
'Holder
in due course.' Code Section 11-3-302.
'Issuer'
(with respect to a letter of credit or letter of credit right). Code Section
11-5-102.
'Issuer'
(with respect to a security). Code Section 11-8-201.
'Issuer'
(with respect to documents of title). Code Section 11-7-102.
'Lease.'
Code Section 11-2A-103.
'Lease
agreement.' Code Section 11-2A-103.
'Lease
contract.' Code Section 11-2A-103.
'Leasehold
interest.' Code Section 11-2A-103.
'Lessee.'
Code Section 11-2A-103.
'Lessee
in ordinary course of business.' Code Section 11-2A-103.
'Lessor.'
Code Section 11-2A-103.
'Lessor's
residual interest.' Code Section 11-2A-103.
'Letter
of credit.' Code Section 11-5-102.
'Merchant.'
Code Section 11-2-104.
'Negotiable
instrument.' Code Section 11-3-104.
'Nominated
person.' Code Section 11-5-102.
'Note.'
Code Section 11-3-104.
'Proceeds
of a letter of credit.' Code Section 11-5-114.
'Prove.'
Code Section 11-3-103.
'Sale.'
Code Section 11-2-106.
'Securities
account.' Code Section 11-8-501.
'Securities
intermediary.' Code Section 11-8-102.
'Security.'
Code Section 11-8-102.
'Security
certificate.' Code Section 11-8-102.
'Security
entitlement.' Code Section 11-8-102.
'Uncertificated
security.' Code Section 11-8-102."
SECTION
2-20.
Said
title is further amended by revising subsection (b) of Code Section 11-9-203,
relating to attachment and enforceability of security interest, as
follows:
"(b)
Enforceability.
Except as otherwise provided in subsections (c) through (i) of this Code
section, a security interest is enforceable against the debtor and third parties
with respect to the collateral only if:
(1)
Value has been given;
(2)
The debtor has rights in the collateral or the power to transfer rights in the
collateral to a secured party; and
(3)
One of the following conditions is met:
(A)
The debtor has authenticated a security agreement that provides a description of
the collateral and, if the security interest covers timber to be cut, a
description of the land concerned;
(B)
The collateral is not a certificated security and is in the possession of the
secured party under Code Section 11-9-313 pursuant to the debtor's security
agreement;
(C)
The collateral is a certificated security in registered form and the security
certificate has been delivered to the secured party under Code Section 11-8-301
pursuant to the debtor's security agreement; or
(D)
The collateral is deposit accounts, electronic chattel paper, investment
property,
or
letter of credit rights,
or electronic
documents, and the secured party has
control under Code Section
11-7-106,
11-9-104, 11-9-105, 11-9-106, or 11-9-107 pursuant to the debtor's security
agreement."
SECTION
2-21.
Said
title is further amended by revising subsection (c) of Code Section 11-9-207,
relating to rights and duties of secured party having possession or control of
collateral, as follows:
"(c)
Duties and rights when
secured party in possession or control.
Except as otherwise provided in subsection (d) of this Code section, a secured
party having possession of collateral or control of collateral under Code
Section
11-7-106,
11-9-104, 11-9-105, 11-9-106, or 11-9-107:
(1)
May hold as additional security any proceeds, except money or funds, received
from the collateral;
(2)
Shall apply money or funds received from the collateral to reduce the secured
obligation, unless remitted to the debtor; and
(3)
May create a security interest in the collateral.
SECTION
2-22.
Said
title is further amended by revising Code Section 11-9-208, relating to
additional duties of secured party having control of collateral, as
follows:
"11-9-208.
Additional duties of
secured party having control of collateral.
(a)
Applicability of Code
section. This Code section applies to
cases in which there is no outstanding secured obligation and the secured party
is not committed to make advances, incur obligations, or otherwise give
value.
(b)
Duties of secured
party after receiving demand from debtor.
Within ten days after receiving an authenticated demand by the
debtor:
(1)
A secured party having control of a deposit account under paragraph (2) of
subsection (a) of Code Section 11-9-104 shall send to the bank with which the
deposit account is maintained an authenticated statement that releases the bank
from any further obligation to comply with instructions originated by the
secured party;
(2)
A secured party having control of a deposit account under paragraph (3) of
subsection (a) of Code Section 11-9-104 shall:
(A)
Pay the debtor the balance on deposit in the deposit account; or
(B)
Transfer the balance on deposit into a deposit account in the debtor's
name;
(3)
A secured party, other than a buyer, having control of electronic chattel paper
under Code Section 11-9-105 shall:
(A)
Communicate the authoritative copy of the electronic chattel paper to the debtor
or its designated custodian;
(B)
If the debtor designates a custodian that is the designated custodian with which
the authoritative copy of the electronic chattel paper is maintained for the
secured party, communicate to the custodian an authenticated record releasing
the designated custodian from any further obligation to comply with instructions
originated by the secured party and instructing the custodian to comply with
instructions originated by the debtor; and
(C)
Take appropriate action to enable the debtor or its designated custodian to make
copies of or revisions to the authoritative copy which add or change an
identified assignee of the authoritative copy without the consent of the secured
party;
(4)
A secured party having control of investment property under paragraph (2) of
subsection (d) of Code Section 11-8-106 or subsection (b) of Code Section
11-9-106 shall send to the securities intermediary or commodity intermediary
with which the security entitlement or commodity contract is maintained an
authenticated record that releases the securities intermediary or commodity
intermediary from any further obligation to comply with entitlement orders or
directions originated by the secured party;
and
(5)
A secured party having control of a letter of credit right under Code Section
11-9-107 shall send to each person having an unfulfilled obligation to pay or
deliver proceeds of the letter of credit to the secured party an authenticated
release from any further obligation to pay or deliver proceeds of the letter of
credit to the secured
party;
and
(6)
A secured party having control of an electronic document shall:
(A)
Give control of the electronic document to the debtor or its designated
custodian;
(B)
If the debtor designates a custodian that is the designated custodian with which
the authoritative copy of the electronic document is maintained for the secured
party, communicate to the custodian an authenticated record releasing the
designated custodian from any further obligation to comply with instructions
originated by the secured party and instructing the custodian to comply with
instructions originated by the debtor; and
(C)
Take appropriate action to enable the debtor or its designated custodian to make
copies of or revisions to the authenticated copy which add or change an
identified assignee of the authoritative copy without the consent of the secured
party."
SECTION
2-23.
Said
title is further amended by revising Code Section 11-9-301, relating to law
governing perfection and priority of security interests, as
follows:
"11-9-301.
Law governing
perfection and priority of security interests.
Except
as otherwise provided in Code Sections 11-9-303 through 11-9-306, the following
rules determine the law governing perfection, the effect of perfection or
nonperfection, and the priority of a security interest in
collateral:
(1)
Except as otherwise provided in this Code section, while a debtor is located in
a jurisdiction, the local law of that jurisdiction governs perfection, the
effect of perfection or nonperfection, and the priority of a security interest
in collateral;
(2)
While collateral is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or nonperfection, and
the priority of a possessory security interest in that collateral;
(3)
Except as otherwise provided in paragraph (4) of this Code section, while
tangible
negotiable documents, goods, instruments, money, or tangible chattel paper is
located in a jurisdiction, the local law of that jurisdiction
governs:
(A)
Perfection of a security interest in the goods by filing a fixture
filing;
(B)
Perfection of a security interest in timber to be cut;
(C)
Perfection of a security interest in crops; and
(D)
The effect of perfection or nonperfection and the priority of a nonpossessory
security interest in the collateral; and
(4)
The local law of the jurisdiction in which the wellhead or minehead is located
governs perfection, the effect of perfection or nonperfection, and the priority
of a security interest in as-extracted collateral."
SECTION
2-24.
Said
title is further amended by revising subsection (b) of Code Section 11-9-310,
relating to when filing required to perfect security interest or agricultural
lien, as follows:
"(b)
Exceptions; filing not
necessary. The filing of a financing
statement is not necessary to perfect a security interest:
(1)
That is perfected under subsection (d), (e), (f), or (g) of Code Section
11-9-308;
(2)
That is perfected under Code Section 11-9-309 when it attaches;
(3)
In property subject to a statute, regulation, or treaty described in subsection
(a) of Code Section 11-9-311;
(4)
In goods in possession of a bailee which is perfected under paragraph (1) or (2)
of subsection (d) of Code Section 11-9-312;
(5)
In certificated securities, documents, goods, or instruments which is perfected
without
filing,
control, or possession under subsection
(e), (f), or (g) of Code Section 11-9-312;
(6)
In collateral in the secured party's possession under Code Section
11-9-313;
(7)
In a certificated security which is perfected by delivery of the security
certificate to the secured party under Code Section 11-9-313;
(8)
In deposit accounts, electronic chattel paper,
electronic
documents, investment property, or letter
of credit rights which is perfected by control under Code
Section 11-9-314;
(9)
In proceeds which is perfected under Code Section 11-9-315; or
(10)
That is perfected under Code Section 11-9-316."
SECTION
2-25.
Said
title is further amended by revising subsection (e) of Code Section 11-9-312,
relating to perfection of security interests in chattel paper, deposit accounts,
documents, goods covered by documents, instruments, investment property, letter
of credit rights, and money, as follows:
"(e)
Temporary perfection;
new value. A security interest in
certificated securities, negotiable documents, or instruments is perfected
without filing or the taking of possession
or
control for a period of 20 days from the
time it attaches to the extent that it arises for new value given under an
authenticated security agreement."
SECTION
2-26.
Said
title is further amended by revising subsection (a) of Code Section 11-9-313,
relating to when possession by or delivery to secured party perfects security
interest without filing, as follows:
"(a)
Perfection by
possession or delivery. Except as
otherwise provided in subsection (b) of this Code section, a secured party may
perfect a security interest in
tangible
negotiable documents, goods, instruments, money, or tangible chattel paper by
taking possession of the collateral. A secured party may perfect a security
interest in certificated securities by taking delivery of the certificated
securities under Code Section 11-8-301."
SECTION
2-27.
Said
title is further amended by revising Code Section 11-9-314, relating to
perfection by control, as follows:
"11-9-314.
Perfection by
control.
(a)
Perfection by
control. A security interest in
investment property, deposit accounts, letter of credit rights,
or
electronic chattel
paper, or
electronic documents may be perfected by
control of the collateral under Code Section
11-7-106,
11-9-104, 11-9-105, 11-9-106, or 11-9-107.
(b)
Specified collateral;
time of perfection by control; continuation of
perfection. A security interest in
deposit accounts, electronic chattel paper,
or
letter of credit
rights, or
electronic documents is perfected by
control under Code Section
11-7-106,
11-9-104, 11-9-105, or 11-9-107 when the secured party obtains control and
remains perfected by control only while the secured party retains
control.
(c)
Investment property;
time of perfection by control; continuation of
perfection. A security interest in
investment property is perfected by control under Code Section 11-9-106
from the time the secured party obtains control and remains perfected by control
until:
(1)
The secured party does not have control; and
(2)
One of the following occurs:
(A)
If the collateral is a certificated security, the debtor has or acquires
possession of the security certificate;
(B)
If the collateral is an uncertificated security, the issuer has registered or
registers the debtor as the registered owner; or
(C)
If the collateral is a security entitlement, the debtor is or becomes the
entitlement holder."
SECTION
2-28.
Said
title is further amended by revising subsections (b) and (d) of Code Section
11-9-317, relating to interests that take priority over or take free of security
interest or agricultual lien, as follows:
"(b)
Buyers that receive
delivery. Except as otherwise provided in
subsection (e) of this Code section, a buyer, other than a secured party, of
tangible chattel paper,
tangible
documents, goods, instruments, or a security certificate takes free of a
security interest or agricultural lien if the buyer gives value and receives
delivery of the collateral without knowledge of the security interest or
agricultural lien and before it is perfected."
"(d)
Licensees and buyers
of certain collateral. A licensee of a
general intangible or a buyer, other than a secured party, of accounts,
electronic chattel paper,
electronic
documents, general intangibles, or
investment property other than a certificated security takes free of a security
interest if the licensee or buyer gives value without knowledge of the security
interest and before it is perfected."
SECTION
2-29.
Said
title is further amended by revising Code Section 11-9-338, relating to priority
of security interest or agricultural lien perfected by filed financing statement
providing certain incorrect information, as follows:
"11-9-338.
Priority of security
interest or agricultural lien perfected by filed financing statement providing
certain incorrect information.
If
a security interest or agricultural lien is perfected by a filed financing
statement providing information described in paragraph (5) of subsection (b) of
Code Section 11-9-516 which is incorrect at the time the financing
statement is filed:
(1)
The security interest or agricultural lien is subordinate to a conflicting
perfected security interest in the collateral to the extent that the holder of
the conflicting security interest gives value in reasonable reliance upon the
incorrect information; and
(2)
A purchaser, other than a secured party, of the collateral takes free of the
security interest or agricultural lien to the extent that, in reasonable
reliance upon the incorrect information, the purchaser gives value and, in the
case of
tangible
chattel paper,
tangible
documents, goods, instruments, or a security certificate, receives delivery of
the collateral."
PART
III
SECTION 3-1.
SECTION 3-1.
This
Act applies to a document of title that is issued or a bailment that arises on
or after the effective date of this Act. This Act does not apply to a document
of title that is issued or a bailment that arises before the effective date of
this Act even if the document of title or bailment would be subject to this Act
if the document of title had been issued or bailment had arisen on or after the
effective date of this Act. This Act does not apply to a right of action that
has accrued before the effective date of this Act.
SECTION
3-2.
A
document of title issued or a bailment that arises before the effective date of
this Act and the rights, documents, and interests flowing from that document or
bailment are governed by any statute or other rule amended or repealed by this
Act as if such amendment or repeal had not occurred and may be terminated,
completed, consummated, or enforced under that statute or other
rule.
SECTION
3-3.
This
Act shall become effective upon its approval by the Governor or upon its
becoming law without such approval.
SECTION
3-4.
All
laws and parts of laws in conflict with this Act are repealed.