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document that represents and calls for those specific goods (or a similar quantity in case of fungible goods); it has three functions (1) that of a receipt for the goods; (2) that of a contract between the parties; (3) that of a symbol of the goods themselves for purpose of evidence of ownership and transfer.

Hence a bill of sale is not a document of title in the sense here meant. The bill of sale shows a transfer of ownership by the issuer of the bill of sale. The document of title is issued by the recipient of the goods and such recipient is not the owner. Furthermore in the further sale of the goods the bill of sale formerly issued is not used but another (if any) is used. So a mere receipt issued by the recipient of goods is not a document of title, although a document of title includes a receipt. So a certificate of stock is not a document of title; nor is a negotiable instrument. In other words bills of lading, warehouse receipts and dock warrants are the true documents of title and the only ones in general commercial use.)

§ 304. (Sales, Sec. 17.) Assignability at common law.

(Note: Documents of title were assignable at common law. There was no distinction between negotiable and non-negotiable documents. The assignee had to notify the carrier or warehouseman that he had acquired the document to protect his title. In view of our consideration of the subject under the Uniform Acts, it is unnecessary to further develop this section.)

§ 305. (Sales, Sec. 18.) Legislation upon documents of title.

(Note: Legislation upon the subject of Documents of Title is covered by the Uniform Sales Act, the Uniform Bill of Lading Act and the Warehouse Receipt Act. For the states in which they are in force see Section infra. See also Federal Bills of Lading Act..

§ 306. (Sales, Sec. 19.) Bills of lading and warehouse receipts are negotiable and non-negotiable, as drawn.

Case 275. Uniform Sales Act, Section 27.

"A document of title in which it is stated that the goods referred to therein will be delivered to the bearer,

or to the order of any person named in such document is a negotiable document of title."

Question 275: What is a negotiable document of title? If an issuer (carrier or warehouseman) stamps "non-negotiable" across a document of title otherwise negotiable, what is the effect thereof (see note below)?

(Note: Negotiable bills of lading are frequently called "order bills" and non-negotiable "straight bills." The Uniform Sales Act, Sec. 30, provides that if a document is issued that would otherwise be negotiable has placed upon it the words "nonnegotiable' it may nevertheless be negotiated by the holder as a negotiable document of title. The Federal Bills of Sales Act provides that any provision in an order bill of lading, or in any notice or tariff, that it is non-negotiable shall be null and void and not affect its negotiability unless upon its face and in writing agreed to by the shipper.

By the Federal Act, a non-negotiable or straight bill shall be plainly stamped "non-negotiable.")

§ 307.

(Sales, Sec. 20.) Legal meaning of negotiability

as here applied.

(Note: Negotiable instruments (bills of exchange, promissory notes and checks) as distinguished from negotiable documents of title have a quality of negotiability which has been applied to order or bearer documents of title. But the two classes of instruments (i. e. negotiable instruments and documents of title) are essentially different, the one class representing general monetary obligation of the issuer, the other representing a liability to account for specific goods. Hence separate bodies of law for each. The negotiable instruments law does not apply to documents of title and the laws governing documents of title do not refer to negotiable instruments.

A negotiable instument (bill of exchange, check, promissory note) has three important characteristics distinguishing it from a non-negotiable obligation. (1) mode of transfer (as by indorsement or delivery); (2) a better right in the transferee than in the transferror if he satisfies certain conditions; (3) no notice. necessary to the obligor or debtor that the instrument has been transferred. These three qualities have been applied to negotiable documents of title. See following comment.

(1) Mode of transfer. A non-negotiable document of title may be assigned but not negotiated. There should be a form of assignment, not a mere indorsement. An indorsement of a nonnegotiable bill does not give the transferee the character or rights of a holder of a negotiable document. He takes subject to "equities" and must notify the issuer of his acquisition. A negotiable document is transferred by indorsement of the consignee and delivery, or if indorsed in blank by the consignee then by mere delivery.

(2) Notice by transferee. Duty and rights of carrier respecting delivery of the goods. If a straight bill is issued the carrier may deliver the goods to the person named therein without requiring the production of the bill of lading, unless it has received notice of its transfer. If an order bill is issued, the carrier must require the production of the bill of lading, for it must assume that, being negotiable, it may have been negotiated. Therefore, if it delivers the goods to any person who does not present the document of title, properly indorsed, it is liable to any person to whom the document of title is negotiated either before or after such delivery of the goods.

(3) Transfer of document in breach of trust. If a document is negotiable and is properly indorsed for transfer, a purchaser in good faith and for value will take a good title notwithstanding the breach of trust. That is, if A has a bill of lading issued to his order, and indorses it to B, or indorses it in blank, and delivers it to B, for some special purpose and B, in breach of his trust negotiates it to C, by indorsement and delivery, or if indorsed in blank by A, then by mere delivery; C gets, if he purchases for value and in good faith, a good title. But the act does not so provide in case of a straight bill.

(4) Rights against carrier by person to whom bill transferred. If a negotiable bill is negotiated to a purchaser for value in good faith such person acquires a right against the carrier to deliver to him the goods therein described and this is true notwithstanding the bill of lading really represents no goods or misdescribes the goods provided it was issued by an agent whose real or apparent authority is to issue bills of lading.)

§§ 308 to 312. (Sales, Secs. 21 to 25.) (No comment or cases; see note above.)

Part I.
Part II.

SUBDIVISION II

SALES OF PERSONAL PROPERTY

Formation of Contract of Sale.

The Contract's Effect as Transferring Title. Part III. The Performance of the Contract.

PART I

FORMATION OF CONTRACT OF SALE

Chapter 40.

Chapter 41.

Chapter 42.

Definition and General Nature.

Parties and Subject Matter.

The Contracts Obligations as Affected by
Warranties.

CHAPTER 40

DEFINITION AND GENERAL NATURE

A. Definitions and Distinctions.

§ 313. Definitions.

§ 314. Consideration called the price.

§ 315. Conditional sales defined.

§ 316. Sales distinguished from gifts.

§ 313. (Sales, Sec. 26.) Definitions.

Case 276. Uniform Sales Act, Sec. 1.

"A contract to sell goods is a contract whereby the seller agrees to transfer the property in goods to the buyer for a consideration called the price.

"A sale of goods is an agreement whereby the seller transfers the property in goods to the buyer for a consideration called the price.

"A contract to sell or a sale may be absolute or conditional.

"There may be a contract to sell or a sale between one part owner and another."

Question 276: Define a sale; a contract to sell.

(Note: A contract to sell is an executory agreement to afterwards transfer title; a sale is a transfer of title. The phrase "contract of sale" is broad enough to describe either. The word sale is also more broadly used to include contracts to sell. Cases defining a sale and distinguishing it from a bailment are found under Sec. 290 supra.)

§ 314. (Sales, Sec. 27.) Consideration called the price.

Case 277. Phifer v. Erwin, 100 North Carolina Reports, 59.

Point Involved:

Whether it is essential to a contract

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