Michigan Laws 440.7504 – Documents of title; transfer by delivery in absence of due negotiation; effect; defeat of transfer rights; diversion or change of shipping instructions; stoppage of delivery
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Terms Used In Michigan Laws 440.7504
- Bailee: means a person that by a warehouse receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them. See Michigan Laws 440.7102
- 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. See Michigan Laws 440.1201
- Buyer in ordinary course of business: means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. See Michigan Laws 440.1201
- Consignee: means a person named in a bill of lading to which or to whose order the bill promises delivery. See Michigan Laws 440.7102
- Consignor: means a person named in a bill of lading as the person from which the goods have been received for shipment. See Michigan Laws 440.7102
- Delivery: means either of the following:
(i) With respect to an electronic document of title, a voluntary transfer of control. See Michigan Laws 440.1201Document of title: means a record that in the regular course of business or financing is treated as adequately evidencing that the person in possession or control of the record is entitled to receive, control, hold, and dispose of the record and the goods the record covers and 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. See Michigan Laws 440.1201 Goods: means all things that are treated as movable for the purposes of a contract for storage or transportation. See Michigan Laws 440.7102
(1) A transferee of a document of title, whether negotiable or nonnegotiable, to which the document has been delivered but not duly negotiated, acquires the title and rights that its transferor had or had actual authority to convey.
(2) In the case of a transfer of a nonnegotiable document of title, until but not after the bailee receives notice of the transfer, the rights of the transferee may be defeated by any of the following:
(a) By those creditors of the transferor which could treat the transfer as void under section 2402 or 2A308.
(b) 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 the buyer’s rights.
(c) 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.
(d) As against the bailee, by good-faith dealings of the bailee with the transferor.
(3) 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 the goods have been delivered to a buyer in ordinary course of business or a leasee in ordinary course of business and, in any event, defeats the consignee’s rights against the bailee.
(4) Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under section 2705 or a lessor under section 2A526, subject to the requirements of due notification in those sections. A bailee 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.