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79R7129 DWS-F
By: Bailey H.B. No. 2452
A BILL TO BE ENTITLED
AN ACT
relating to uniform law on documents of title.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 7, Business & Commerce Code, is amended
to read as follows:
CHAPTER 7. DOCUMENTS OF TITLE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 7.101. SHORT TITLE. This chapter may be cited as
Uniform Commercial Code--Documents of Title.
Sec. 7.102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
this chapter, unless the context otherwise requires:
(1) "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.
(2) "Carrier" means a person that issues a bill of
lading.
(3) "Consignee" means a person named in a bill of
lading to which or to whose order the bill promises delivery.
(4) "Consignor" means a person named in a bill of
lading as the person from which the goods have been received for
shipment.
(5) "Delivery order" means a record that contains an
order to deliver goods directed to a warehouse, carrier, or other
person that in the ordinary course of business issues warehouse
receipts or bills of lading.
(6) [Reserved.]
(7) "Goods" means all things that are treated as
movable for the purposes of a contract for storage or
transportation.
(8) "Issuer" means a bailee that issues a document of
title or, in the case of an unaccepted delivery order, the person
that orders the possessor of goods to deliver. The term includes a
person for 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, even if the issuer did not receive any goods, the
goods were misdescribed, or in any other respect the agent or
employee violated the issuer's instructions.
(9) "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) [Reserved.]
(11) "Shipper" means a person that enters into a
contract of transportation with a carrier.
(12) "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.
(13) "Warehouse" means a person engaged in the
business of storing goods for hire.
(b) Definitions in other chapters applying to this chapter
and the sections in which they appear are:
(1) "Contract for sale," Section 2.106.
(2) "Lessee in ordinary course of business," Section
2A.103.
(3) "'Receipt' of goods," Section 2.103.
(c) In addition, Chapter 1 contains general definitions and
principles of construction and interpretation applicable
throughout this chapter.
Sec. 7.103. RELATION OF ARTICLE TO TREATY OR STATUTE. (a)
This chapter is subject to any treaty or statute of the United
States or a regulatory statute of this state to the extent the
treaty, statute, or regulatory statute is applicable.
(b) This chapter does not repeal or modify any law
prescribing the form or contents of a document of title or the
services or facilities to be afforded by a bailee, or otherwise
regulating a bailee's businesses in respects not specifically
treated in this chapter. However, violation of these laws does not
affect the status of a document of title that otherwise complies
with the definition of a document of title.
(c) This chapter 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 there is a conflict between Chapter 43 and
this chapter, this chapter governs.
Sec. 7.104. NEGOTIABLE AND NONNEGOTIABLE DOCUMENT OF TITLE.
(a) A document of title is negotiable if by its terms the goods are
to be delivered to bearer or to the order of a named person.
(b) A document of title other than one described in
Subsection (a) is nonnegotiable. A bill of lading that states that
the goods are consigned to a named person is not made negotiable by
a provision that the goods are to be delivered only against an order
in a record signed by the same or another named person.
(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.
Sec. 7.105. REISSUANCE IN ALTERNATIVE MEDIUM. (a) 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):
(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 the electronic document of title in
substitution for a tangible document of title in accordance with
Subsection (c):
(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.
Sec. 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), and a person is
deemed to have control of an electronic document of title, if the
document is created, stored, and assigned in such a manner that:
(1) a single authoritative copy of the document exists
which is unique, identifiable, and, except as otherwise provided in
Subdivisions (4), (5), and (6), 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.
SUBCHAPTER B. WAREHOUSE RECEIPTS: SPECIAL PROVISIONS
Sec. 7.201. PERSON THAT MAY ISSUE A WAREHOUSE RECEIPT;
STORAGE UNDER BOND. (a) A warehouse receipt may be issued by any
warehouse.
(b) 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 is deemed to
be a warehouse receipt even if issued by a person that is the owner
of the goods and is not a warehouse.
Sec. 7.202. FORM OF WAREHOUSE RECEIPT. (a) A warehouse
receipt need not be in any particular form.
(b) Unless a warehouse receipt provides for each of the
following, the warehouse is liable for damages caused to a person
injured by its omission:
(1) the location of the warehouse facility where the
goods are stored;
(2) the date of issue of the receipt;
(3) the unique identification code of the receipt;
(4) a statement whether the goods received will be
delivered to the bearer, to a named person, or to a named person or
its order;
(5) the rate of storage and handling charges, but if
goods are stored under a field warehousing arrangement, a statement
of that fact is sufficient on a nonnegotiable receipt;
(6) a description of the goods or the packages
containing them;
(7) the signature of the warehouse or its agent;
(8) if the receipt is issued for goods that the
warehouse owns, either solely, jointly, or in common with others,
the fact of that ownership; and
(9) a statement of the amount of advances made and of
liabilities incurred for which the warehouse claims a lien or
security interest, but if the precise amount of advances made or of
liabilities incurred is, at the time of the issue of the receipt,
unknown to the warehouse or to its agent that issued the receipt, a
statement of the fact that advances have been made or liabilities
incurred and the purpose of the advances or liabilities is
sufficient.
(c) A warehouse may insert in its receipt any terms that are
not contrary to this title and do not impair its obligation of
delivery under Section 7.403 or its duty of care under Section
7.204. Any contrary provisions are ineffective.
Sec. 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, that relies upon the description
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 document conspicuously indicates that the
issuer does not know whether all or part of the goods in fact were
received or conform to the description, 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 words of
similar import, if the indication is true; or
(2) the party or purchaser otherwise has notice of the
nonreceipt or misdescription.
Sec. 7.204. DUTY OF CARE; CONTRACTUAL LIMITATION OF
WAREHOUSE'S LIABILITY. (a) A warehouse is liable for damages for
loss of or injury to the goods caused by its failure to exercise
care with regard to the goods that a reasonably careful person would
exercise under similar circumstances. However, unless otherwise
agreed, the warehouse is not liable for damages that could not have
been avoided by the exercise of that care.
(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 beyond which the warehouse is not liable.
Such a limitation is not effective with respect to the warehouse's
liability for conversion to its own use. The warehouse's
liability, on request of the bailor in a record at the time of
signing such storage agreement or within a reasonable time after
receipt of the warehouse receipt, may be increased on part or all of
the goods covered by the storage agreement or the warehouse
receipt. In this event, increased rates may be charged based on an
increased valuation of the goods.
(c) Reasonable provisions as to the time and manner of
presenting claims and commencing actions based on the bailment may
be included in the warehouse receipt or storage agreement.
Sec. 7.205. TITLE UNDER WAREHOUSE RECEIPT DEFEATED IN
CERTAIN CASES. A buyer in ordinary course of business of fungible
goods sold and delivered by a 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 if the receipt is negotiable and has
been duly negotiated.
Sec. 7.206. TERMINATION OF STORAGE AT WAREHOUSE'S OPTION.
(a) A 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 a period is not fixed, within a
stated period not less than 30 days after the warehouse gives
notice. If the goods are not removed before the date specified in
the notice, the warehouse may sell them pursuant to Section 7.210.
(b) If a warehouse in good faith believes that goods are
about to deteriorate or decline in value to less than the amount of
its lien within the time provided in Subsection (a) and Section
7.210, the warehouse may specify in the notice given under
Subsection (a) any reasonable shorter time for removal of the goods
and, if the goods are not removed, may sell them at public sale held
not less than one week after a single advertisement or posting.
(c) If, as a result of a quality or condition of the goods of
which the warehouse did not have notice at the time of deposit, the
goods are a hazard to other property, the warehouse facilities, or
other persons, the 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
warehouse, after a reasonable effort, is unable to sell the goods,
it may dispose of them in any lawful manner and does not incur
liability by reason of that disposition.
(d) A warehouse shall deliver the goods to any person
entitled to them under this chapter upon due demand made at any time
before sale or other disposition under this section.
(e) A warehouse may satisfy its lien from the proceeds of
any sale or disposition under this section but shall hold the
balance for delivery on the demand of any person to which the
warehouse would have been bound to deliver the goods.
Sec. 7.207. GOODS MUST BE KEPT SEPARATE; FUNGIBLE GOODS.
(a) Unless the warehouse receipt provides otherwise, a warehouse
shall keep separate the goods covered by each receipt so as to
permit at all times identification and delivery of those goods.
However, different lots of fungible goods may be commingled.
(b) If different lots of fungible goods are commingled, the
goods are owned in common by the persons entitled thereto and the
warehouse is severally liable to each owner for that owner's share.
If, because of overissue, a mass of fungible goods is insufficient
to meet all the receipts the warehouse has issued against it, the
persons entitled include all holders to which overissued receipts
have been duly negotiated.
Sec. 7.208. ALTERED WAREHOUSE RECEIPTS. If a blank in a
negotiable tangible warehouse receipt has been filled in without
authority, a good faith purchaser for value and without notice of
the 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.
Sec. 7.209. LIEN OF WAREHOUSE. (a) A warehouse has a lien
against the bailor on the goods covered by a warehouse receipt or
storage agreement or on the proceeds thereof in 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 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 warehouse also has a lien against the
goods covered by the warehouse receipt or storage agreement or on
the proceeds thereof in its possession for those charges and
expenses, whether or not the other goods have been delivered by the
warehouse. However, as against a person to which a negotiable
warehouse receipt is duly negotiated, a warehouse's lien is limited
to charges in an amount or at a rate specified in the warehouse
receipt or, if no charges are so specified, to a reasonable charge
for storage of the specific goods covered by the receipt subsequent
to the date of the receipt.
(b) The warehouse may also reserve a security interest under
Chapter 9 against the bailor for the maximum amount specified on the
receipt for charges other than those specified in Subsection (a),
such as for money advanced and interest. A security interest is
governed by Chapter 9.
(c) A warehouse's lien for charges and expenses under
Subsection (a) or a security interest under Subsection (b) is also
effective against any person that so entrusted the bailor with
possession of the goods that a pledge of them by the bailor to a good
faith purchaser for value would have been valid. However, the lien
or security interest is not effective against a person 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
covering the goods to the bailor or the bailor's nominee with actual
or apparent authority to ship, store, or sell; or with power to
obtain delivery under Section 7.403; or with power of disposition
under Section 2.403, 2A.304(a)(2), 2A.305(a)(2), or 9.320 or other
statute or rule of law; or
(2) acquiesce in the procurement by the bailor or its
nominee of any document.
(d) A warehouse's lien on household goods for charges and
expenses in relation to the goods under Subsection (a) is also
effective against all persons if the depositor was the legal
possessor of the goods at the time of deposit. In this subsection,
"household goods" means furniture, furnishings, or personal
effects used by the depositor in a dwelling.
(e) A warehouse loses its lien on any goods that it
voluntarily delivers or unjustifiably refuses to deliver.
Sec. 7.210. ENFORCEMENT OF WAREHOUSE'S LIEN. (a) Except as
otherwise provided in Subsection (b), a warehouse's lien may be
enforced by public or private sale of the goods, in bulk or in
packages, at any time or place and on any terms that are
commercially reasonable, after notifying all persons known to claim
an interest in the goods. The notification must 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 warehouse is not of itself sufficient to
establish that the sale was not made in a commercially reasonable
manner. The warehouse has sold in a commercially reasonable manner
if the warehouse sells the goods in the usual manner in any
recognized market therefor, sells at the price current in that
market at the time of the sale, or has otherwise sold in conformity
with commercially reasonable practices among dealers in the type of
goods sold. 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.
(b) A warehouse's lien on goods, other than goods stored by
a merchant in the course of its business, may be enforced only if
the following requirements are satisfied:
(1) All persons known to claim an interest in the goods
must be notified.
(2) The notification must 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 10
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.
(3) The sale must conform to the terms of the
notification.
(4) The sale must be held at the nearest suitable place
to where the goods are held or stored.
(5) After the expiration of the time given in the
notification, an advertisement of the sale must 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
include a description of the goods, the name of the person on whose
account the goods are being held, and the time and place of the
sale. The sale must 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 be posted at least 10
days before the sale in not less than six conspicuous places in the
neighborhood of the proposed sale.
(c) Before any sale pursuant to this section, any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred in complying
with this section. In that event, the goods may not be sold but must
be retained by the warehouse subject to the terms of the receipt and
this chapter.
(d) A warehouse may buy at any public sale held pursuant to
this section.
(e) A purchaser in good faith of goods sold to enforce a
warehouse's lien takes the goods free of any rights of persons
against which the lien was valid, despite the warehouse's
noncompliance with this section.
(f) A warehouse may satisfy its lien from the proceeds of
any sale pursuant to this section but shall hold the balance, if
any, for delivery on demand to any person to which the warehouse
would have been bound to deliver the goods.
(g) The rights provided by this section are in addition to
all other rights allowed by law to a creditor against a debtor.
(h) If a lien is on goods stored by a merchant in the course
of its business, the lien may be enforced in accordance with
Subsection (a) or (b).
(i) A warehouse is liable for damages caused by failure to
comply with the requirements for sale under this section and, in
case of wilful violation, is liable for conversion.
SUBCHAPTER C. BILLS OF LADING: SPECIAL PROVISIONS
Sec. 7.301. LIABILITY FOR NONRECEIPT OR MISDESCRIPTION;
"SAID TO CONTAIN"; "SHIPPER'S LOAD AND COUNT"; IMPROPER HANDLING.
(a) A consignee of a nonnegotiable bill of lading which has given
value in good faith, or a holder to which a negotiable bill has been
duly negotiated, relying upon the description of the goods in the
bill or upon the date 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
of title 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 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 words of similar import, if that indication is true.
(b) If goods are loaded by the issuer of the bill of lading,
the issuer shall count the packages of goods if shipped in packages
and ascertain the kind and quantity if shipped in bulk and words
such as "shipper's weight, load and count," or words of similar
import indicating that the description was made by the shipper are
ineffective except as to goods concealed by packages.
(c) If bulk goods are loaded by a shipper that makes
available to the issuer of the bill of lading adequate facilities
for weighing those goods, the issuer shall ascertain the kind and
quantity within a reasonable time after receiving the shipper's
request in a record to do so. In that case, "shipper's weight" or
words of similar import are ineffective.
(d) The issuer, by including in the bill of lading the words
"shipper's weight, load and count," or words of similar import, may
indicate that the goods were loaded by the shipper, and, if that
statement is true, the issuer is not liable for damages caused by
the improper loading. However, omission of such words does not
imply liability for damages caused by improper loading.
(e) A shipper guarantees to the issuer the accuracy at the
time of shipment of the description, marks, labels, number, kind,
quantity, condition, and weight, as furnished by the shipper, and
the shipper shall indemnify the issuer against damage caused by
inaccuracies in those particulars. This right of the issuer to that
indemnity does not limit its responsibility or liability under the
contract of carriage to any person other than the shipper.
Sec. 7.302. THROUGH BILLS OF LADING AND SIMILAR DOCUMENTS
OF TITLE. (a) The issuer of a through bill of lading or other
document of title embodying an undertaking to be performed in part
by a person acting as its agent or by a performing carrier is liable
to any person entitled to recover on the document for any breach by
the other person or the performing carrier of its obligation under
the document. However, to the extent that the bill 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.
(b) If goods covered by a through bill of lading or other
document of title embodying an undertaking to be performed in part
by a person other than the issuer are received by that person, the
person is subject, with respect to its own performance while the
goods are in its possession, to the obligation of the issuer. The
person's obligation is discharged by delivery of the goods to
another person pursuant to the document and does not include
liability for breach by any other person or by the issuer.
(c) The issuer of a through bill of lading or other document
of title described in Subsection (a) is entitled to recover from the
performing carrier, or other person in possession of the goods when
the breach of the obligation under the document occurred:
(1) the amount it may be required to pay to any person
entitled to recover on the document for the breach, as may be
evidenced by any receipt, judgment, or transcript of judgment; and
(2) the amount of any expense reasonably incurred by
the issuer in defending any action commenced by any person entitled
to recover on the document for the breach.
Sec. 7.303. DIVERSION; RECONSIGNMENT; CHANGE OF
INSTRUCTIONS. (a) Unless the bill of lading otherwise provides, 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:
(1) the holder of a negotiable bill;
(2) the consignor on a nonnegotiable bill even if the
consignee has given contrary instructions;
(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
(4) the consignee on a nonnegotiable bill, if the
consignee is entitled as against the consignor to dispose of the
goods.
(b) Unless instructions described in Subsection (a) are
included in a negotiable bill of lading, a person to which the bill
is duly negotiated may hold the bailee according to the original
terms.
Sec. 7.304. TANGIBLE BILLS OF LADING IN SET. (a) Except as
customary in international transportation, a tangible bill of
lading may not be issued in a set of parts. The issuer is liable for
damages caused by violation of this subsection.
(b) If a tangible bill of lading is lawfully issued in a set
of parts, each of which 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 constitutes one bill.
(c) If 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 which the first due
negotiation is made prevails as to both the document of title and
the goods even if any later holder may have received the goods from
the carrier in good faith and discharged the carrier's obligation
by surrendering its part.
(d) A person that negotiates or transfers a single part of a
tangible bill of lading issued in a set is liable to holders of that
part as if it were the whole set.
(e) The bailee is obliged to deliver in accordance with
Subchapter D against the first presented part of a tangible bill of
lading lawfully issued in a set. Delivery in this manner discharges
the bailee's obligation on the whole bill.
Sec. 7.305. DESTINATION BILLS. (a) Instead of issuing a
bill of lading to the consignor at the place of shipment, a carrier,
at the request of the consignor, may procure the bill to be issued
at destination or at any other place designated in the request.
(b) Upon request of any person entitled as against a 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 the goods, the issuer, subject to Section 7.105, may
procure a substitute bill to be issued at any place designated in
the request.
Sec. 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.
Sec. 7.307. LIEN OF CARRIER. (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 after the date of 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. 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, a reasonable charge.
(b) A lien for charges and expenses under Subsection (a) on
goods 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 those charges
and expenses. Any other lien under Subsection (a) is effective
against the consignor and any person that permitted the bailor to
have control or possession of the goods unless the carrier had
notice that the bailor lacked authority.
(c) A carrier loses its lien on any goods that it
voluntarily delivers or unjustifiably refuses to deliver.
Sec. 7.308. ENFORCEMENT OF CARRIER'S LIEN. (a) A carrier's
lien on goods may be enforced by public or private sale of the
goods, in bulk or in packages, at any time or place and on any terms
that are commercially reasonable, after notifying all persons known
to claim an interest in the goods. The notification must 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 carrier is not of itself
sufficient to establish that the sale was not made in a commercially
reasonable manner. The carrier has sold goods in a commercially
reasonable manner if the carrier sells the goods in the usual manner
in any recognized market therefor, sells at the price current in
that market at the time of the sale, or has otherwise sold in
conformity with commercially reasonable practices among dealers in
the type of goods sold. 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.
(b) Before any sale pursuant to this section, any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred in complying
with this section. In that event, the goods may not be sold but must
be retained by the carrier, subject to the terms of the bill of
lading and this chapter.
(c) A carrier may buy at any public sale pursuant to this
section.
(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
which the lien was valid, despite the carrier's noncompliance with
this section.
(e) A carrier may satisfy its lien from the proceeds of any
sale pursuant to this section but shall hold the balance, if any,
for delivery on demand to any person to which the carrier would have
been bound to deliver the goods.
(f) The rights provided by this section are in addition to
all other rights allowed by law to a creditor against a debtor.
(g) A carrier's lien may be enforced pursuant to either
Subsection (a) or the procedure set forth in Section 7.210(b).
(h) A carrier is liable for damages caused by failure to
comply with the requirements for sale under this section and, in
case of wilful violation, is liable for conversion.
Sec. 7.309. DUTY OF CARE; CONTRACTUAL LIMITATION OF
CARRIER'S LIABILITY. (a) A carrier that issues a bill of lading,
whether negotiable or nonnegotiable, shall exercise the degree of
care in relation to the goods which a reasonably careful person
would exercise under similar circumstances. This subsection does
not affect any statute, regulation, or rule of law that imposes
liability upon a common carrier for damages not caused by its
negligence.
(b) Damages may be limited by a term in the bill of lading or
in a transportation agreement that the carrier's liability may not
exceed a value stated in the bill or transportation agreement if the
carrier's rates are dependent upon value and the consignor is
afforded an opportunity to declare a higher value and is advised of
the opportunity. However, such a limitation is not effective with
respect to the carrier's liability for conversion to its own use.
(c) Reasonable provisions as to the time and manner of
presenting claims and commencing actions based on the shipment may
be included in a bill of lading or a transportation agreement.
SUBCHAPTER D. WAREHOUSE RECEIPTS AND BILLS OF LADING: GENERAL
OBLIGATIONS
Sec. 7.401. IRREGULARITIES IN ISSUE OF RECEIPT OR BILL OR
CONDUCT OF ISSUER. The obligations imposed by this chapter on an
issuer apply to a document of title even if:
(1) the document does not comply with the requirements
of this chapter or of any other statute, rule, or regulation
regarding its issue, form, or content;
(2) the issuer violated laws regulating the conduct of
its business;
(3) the goods covered by the document were owned by the
bailee when the document was issued; or
(4) the person issuing the document is not a warehouse
but the document purports to be a warehouse receipt.
Sec. 7.402. DUPLICATE DOCUMENT OF TITLE; OVERISSUE. A
duplicate or any other document of title purporting to cover goods
already represented by an outstanding document of the same issuer
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, substitutes for lost, stolen, or
destroyed documents, or substitute documents issued pursuant to
Section 7.105. The issuer is liable for damages caused by its
overissue or failure to identify a duplicate document by a
conspicuous notation.
Sec. 7.403. OBLIGATION OF WAREHOUSE OR CARRIER TO DELIVER;
EXCUSE. (a) A bailee shall deliver the goods to a person entitled
under a document of title if the person complies with Subsections
(b) and (c), unless and to the extent that the bailee establishes
any of the following:
(1) delivery of the goods to a person whose receipt was
rightful as against the claimant;
(2) damage to or delay, loss, or destruction of the
goods for which the bailee is not liable;
(3) previous sale or other disposition of the goods in
lawful enforcement of a lien or on a warehouse's lawful termination
of storage;
(4) the exercise by a seller of its right to stop
delivery pursuant to Section 2.705 or by a lessor of its right to
stop delivery pursuant to Section 2A.526;
(5) a diversion, reconsignment, or other disposition
pursuant to Section 7.303;
(6) release, satisfaction, or any other fact affording
a personal defense against the claimant; or
(7) any other lawful excuse.
(b) A person claiming goods covered by a document of title
shall satisfy the bailee's lien if the bailee so requests or the
bailee is prohibited by law from delivering the goods until the
charges are paid.
(c) Unless a person claiming the goods is one against which
the document of title does not confer a right under Section
7.503(a):
(1) the person claiming under a document shall
surrender possession or control of any outstanding negotiable
document covering the goods for cancellation or indication of
partial deliveries; and
(2) the bailee shall cancel the document or
conspicuously indicate in the document the partial delivery or be
liable to any person to which the document is duly negotiated.
Sec. 7.404. NO LIABILITY FOR GOOD FAITH DELIVERY PURSUANT
TO DOCUMENT OF TITLE. A bailee that in good faith has received
goods and delivered or otherwise disposed of the goods according to
the terms of a document of title or pursuant to this chapter is not
liable for the goods even if:
(1) the person from which the bailee received the
goods did not have authority to procure the document or to dispose
of the goods; or
(2) the person to which the bailee delivered the goods
did not have authority to receive the goods.
SUBCHAPTER E. WAREHOUSE RECEIPTS AND BILLS OF LADING: NEGOTIATION
AND TRANSFER
Sec. 7.501. FORM OF NEGOTIATION AND REQUIREMENTS OF DUE
NEGOTIATION. (a) The following rules apply to a negotiable
tangible document of title:
(1) If the document's original terms run to the order
of a named person, the document is negotiated by the named person's
indorsement and delivery. After the named person's indorsement in
blank or to bearer, any person may negotiate the document by
delivery alone.
(2) If the document's original terms run to bearer, it
is negotiated by delivery alone.
(3) If the document's original terms run to the order
of a named person and it is delivered to the named person, the
effect is the same as if the document had been negotiated.
(4) Negotiation of the document after it has been
indorsed to a named person requires indorsement by the named person
as well as delivery.
(5) 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 receiving the document in
settlement or payment of a monetary 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.
(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.
(c) Indorsement of a nonnegotiable document of title
neither makes it negotiable nor adds to the transferee's rights.
(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 or constitute notice to a purchaser of the
bill of any interest of that person in the goods.
Sec. 7.502. RIGHTS ACQUIRED BY DUE NEGOTIATION. (a)
Subject to Sections 7.205 and 7.503, a holder to which a negotiable
document of title has been duly negotiated acquires thereby:
(1) title to the document;
(2) title to the goods;
(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
(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 the issuer except those arising under the terms
of the document or under this chapter. 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.
(b) Subject to Section 7.503, title and rights acquired by
due negotiation are not defeated by any stoppage of the goods
represented by the document of title or by surrender of the goods by
the bailee and are not impaired even if:
(1) the due negotiation or any prior due negotiation
constituted a breach of duty;
(2) any person has been deprived of possession of a
negotiable tangible document or control of a negotiable electronic
document by misrepresentation, fraud, accident, mistake, duress,
loss, theft, or conversion; or
(3) a previous sale or other transfer of the goods or
document has been made to a third person.
Sec. 7.503. DOCUMENT OF TITLE TO GOODS DEFEATED IN CERTAIN
CASES. (a) A document of title confers no right in goods against a
person that before issuance of the document 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
covering the goods to the bailor or the bailor's nominee with actual
or apparent authority to ship, store, or sell; with power to obtain
delivery under Section 7.403; or with power of disposition under
Section 2.403, 2A.304(a)(2), 2A.305(a)(2), or 9.320 or other
statute or rule of law; or
(2) acquiesce in the procurement by the bailor or its
nominee of any document.
(b) Title to goods based upon an unaccepted delivery order
is subject to the rights of any person to which a negotiable
warehouse receipt or bill of lading covering the goods has been duly
negotiated. That title may be defeated under Section 7.504 to the
same extent as the rights of the issuer or a transferee from the
issuer.
(c) Title to goods based upon a bill of lading issued to a
freight forwarder is subject to the rights of any person to which a
bill issued by the freight forwarder is duly negotiated. However,
delivery by the carrier in accordance with Subchapter D pursuant to
its own bill of lading discharges the carrier's obligation to
deliver.
Sec. 7.504. RIGHTS ACQUIRED IN ABSENCE OF DUE NEGOTIATION;
EFFECT OF DIVERSION; STOPPAGE OF DELIVERY. (a) 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.
(b) In the case 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:
(1) by those creditors of the transferor that could
treat the transfer as void under Section 2.402 or 2A.308;
(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 the buyer's rights;
(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 dealings of
the bailee with the transferor.
(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 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.
(d) Delivery of the goods pursuant to a nonnegotiable
document of title may be stopped by a seller under Section 2.705 or
a lessor under Section 2A.526, subject to the requirements of due
notification in those sections. A bailee honoring the seller's or
lessor's instructions is entitled to be indemnified by the seller
or lessor against any resulting loss or expense.
Sec. 7.505. INDORSER NOT 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
previous indorsers.
Sec. 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 its transferor
supply any necessary indorsement, but the transfer becomes a
negotiation only as of the time the indorsement is supplied.
Sec. 7.507. WARRANTIES ON NEGOTIATION OR DELIVERY OF
DOCUMENT OF TITLE. If a person negotiates or delivers a document of
title for value, otherwise than as a mere intermediary under
Section 7.508, unless otherwise agreed, the transferor warrants to
its immediate purchaser only in addition to any warranty made in
selling or leasing the goods that:
(1) the document is genuine;
(2) the transferor does not have knowledge of any fact
that would impair the document's validity or worth; and
(3) the negotiation or delivery is rightful and fully
effective with respect to the title to the document and the goods it
represents.
Sec. 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 the delivery of the documents only its own good faith
and authority even if the collecting bank or other intermediary has
purchased or made advances against the claim or draft to be
collected.
Sec. 7.509. ADEQUATE COMPLIANCE WITH COMMERCIAL CONTRACT.
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 determined by Chapter 2, 2A, or 5.
SUBCHAPTER F. WAREHOUSE RECEIPTS AND BILLS OF LADING:
MISCELLANEOUS PROVISIONS
Sec. 7.601. LOST, STOLEN, OR DESTROYED DOCUMENTS OF TITLE.
(a) If a document 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 the
order. If the document was negotiable, a court may not order
delivery of the goods or issuance of a substitute document without
the claimant's posting security unless it finds that any person
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 nonnegotiable, the court may require security.
The court may also order payment of the bailee's reasonable costs
and attorney's fees in any action under this subsection.
(b) A bailee that without court order delivers goods to a
person claiming under a missing negotiable document of title is
liable to any person injured thereby. If the delivery is not in
good faith, the bailee is liable for conversion. Delivery in good
faith is not conversion 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 that
files a notice of claim within one year after the delivery.
Sec. 7.602. ATTACHMENT OF GOODS COVERED BY NEGOTIABLE
DOCUMENT OF TITLE. Unless a document of title was originally issued
upon delivery of the goods by a person that did not have power to
dispose of them, a lien 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 is first surrendered to the bailee or the
document's negotiation is enjoined. The bailee may not be
compelled to deliver the goods pursuant to process until possession
or control of the document is surrendered to the bailee or to the
court. A purchaser of the document for value without notice of the
process or injunction takes free of the lien imposed by judicial
process.
Sec. 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 the bailee has a reasonable time to
ascertain the validity of the adverse claims or to commence an
action for interpleader. The bailee may assert an interpleader
either in defending an action for nondelivery of the goods or by
original action.
[CHAPTER 7. WAREHOUSE RECEIPTS, BILLS OF LADING AND OTHER
DOCUMENTS OF TITLE
[SUBCHAPTER A. GENERAL
[Sec. 7.101. SHORT TITLE. This chapter may be cited as
Uniform Commercial Code--Documents of Title.
[Sec. 7.102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
this chapter, unless the context otherwise requires:
[(1) "Bailee" means the person who by a warehouse
receipt, bill of lading or other document of title acknowledges
possession of goods and contracts to deliver them.
[(2) "Consignee" means the person named in a bill to
whom or to whose order the bill promises delivery.
[(3) "Consignor" means the person named in a bill as
the person from whom the goods have been received for shipment.
[(4) "Delivery order" means a written order to deliver
goods directed to a warehouseman, carrier or other person who in the
ordinary course of business issues warehouse receipts or bills of
lading.
[(5) "Document" means document of title as defined in
the general definitions in Chapter 1 (Section 1.201).
[(6) "Goods" means all things which are treated as
movable for the purposes of a contract of storage or
transportation.
[(7) "Issuer" means a bailee who issues a document
except that in relation to an unaccepted delivery order it means the
person who orders the possessor of goods to deliver. Issuer
includes any person for whom 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 the issuer
received no goods or that the goods were misdescribed or that in any
other respect the agent or employee violated his instructions.
[(8) "Warehouseman" is a person engaged in the
business of storing goods for hire.
[(b) Other definitions applying to this chapter or to
specified subchapters thereof, and the sections in which they
appear are:
["Duly negotiate". Section 7.501.
["Person entitled under the document". Section
7.403(d).
[(c) Definitions in other chapters applying to this chapter
and the sections in which they appear are:
["Contract for sale". Section 2.106.
["Overseas". Section 2.323.
["Receipt" of goods. Section 2.103.
[(d) In addition Chapter 1 contains general definitions and
principles of construction and interpretation applicable
throughout this chapter.
[Sec. 7.103. RELATION OF CHAPTER TO TREATY, STATUTE,
TARIFF, CLASSIFICATION OR REGULATION. To the extent that any
treaty or statute of the United States, regulatory statute of this
state or tariff, classification or regulation filed or issued
pursuant thereto is applicable, the provisions of this chapter are
subject thereto.
[Sec. 7.104. NEGOTIABLE AND NON-NEGOTIABLE WAREHOUSE
RECEIPT, BILL OF LADING OR OTHER DOCUMENT OF TITLE. (a) A
warehouse receipt, bill of lading or other document of title is
negotiable
[(1) if by its terms the goods are to be delivered to
bearer or to the order of a named person; or
[(2) where recognized in overseas trade, if it runs to
a named person or assigns.
[(b) Any other document is non-negotiable. A bill of lading
in which it is stated 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 order signed by the same or another
named person.
[Sec. 7.105. CONSTRUCTION AGAINST NEGATIVE IMPLICATION.
The omission from either Subchapter B or Subchapter C of this
chapter of a provision corresponding to a provision made in the
other subchapter does not imply that a corresponding rule of law is
not applicable.
[SUBCHAPTER B. WAREHOUSE RECEIPTS: SPECIAL PROVISIONS
[Sec. 7.201. WHO MAY ISSUE A WAREHOUSE RECEIPT; STORAGE
UNDER GOVERNMENT BOND. (a) A warehouse receipt may be issued by
any warehouseman.
[(b) Where 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 a warehouse receipt even though issued by a person
who is the owner of the goods and is not a warehouseman.
[Sec. 7.202. FORM OF WAREHOUSE RECEIPT; ESSENTIAL TERMS;
OPTIONAL TERMS. (a) A warehouse receipt need not be in any
particular form.
[(b) Unless a warehouse receipt embodies within its written
or printed terms each of the following, the warehouseman is liable
for damages caused by the omission to a person injured thereby:
[(1) the location of the warehouse where the goods are
stored;
[(2) the date of issue of the receipt;
[(3) the consecutive number of the receipt;
[(4) a statement whether the goods received will be
delivered to the bearer, to a specified person, or to a specified
person or his order;
[(5) the rate of storage and handling charges, except
that where goods are stored under a field warehousing arrangement a
statement of that fact is sufficient on a non-negotiable receipt;
[(6) a description of the goods or of the packages
containing them;
[(7) the signature of the warehouseman, which may be
made by his authorized agent;
[(8) if the receipt is issued for goods of which the
warehouseman is owner, either solely or jointly or in common with
others, the fact of such ownership; and
[(9) a statement of the amount of advances made and of
liabilities incurred for which the warehouseman claims a lien or
security interest (Section 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, unknown to the warehouseman or to his agent
who issues it, a statement of the fact that advances have been made
or liabilities incurred and the purpose thereof is sufficient.
[(c) A warehouseman may insert in his receipt any other
terms which are not contrary to the provisions of this title and do
not impair his obligation of delivery (Section 7.403) or his duty of
care (Section 7.204). Any contrary provisions shall be
ineffective.
[Sec. 7.203. LIABILITY FOR NON-RECEIPT 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 upon the
description therein of the goods may recover from the issuer
damages caused by the non-receipt or misdescription of the goods,
except to the extent that the document conspicuously indicates that
the issuer does not know whether any part or all of the goods in fact
were received or conform to the description, as where 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, if
such indication be true, or the party or purchaser otherwise has
notice.
[Sec. 7.204. DUTY OF CARE; CONTRACTUAL LIMITATION OF
WAREHOUSEMAN'S LIABILITY. (a) A warehouseman is liable for
damages for loss of or injury to the goods caused by his failure to
exercise such care in regard to them as a reasonably careful man
would exercise under like circumstances but unless otherwise agreed
he is not liable for damages which could not have been avoided by
the exercise of such care.
[(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 shall not be liable; provided, however, that such
liability may on written request of the bailor at the time of
signing such storage agreement or within a reasonable time after
receipt of the warehouse receipt be increased on part or all of the
goods thereunder, in which event increased rates may be charged
based on such 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.
[(c) Reasonable provisions as to the time and manner of
presenting claims and instituting actions based on the bailment may
be included in the warehouse receipt or tariff.
[(d) This section does not impair or repeal Texas Revised
Civil Statutes of 1925, Articles 5545 and 5546.
[Sec. 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 is also in
the business of buying and selling such goods takes free of any
claim under a warehouse receipt even though it has been duly
negotiated.
[Sec. 7.206. TERMINATION OF STORAGE AT WAREHOUSEMAN'S
OPTION. (a) A warehouseman may on notifying the person on whose
account the goods are held and any other person known to claim an
interest in the goods 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, or, if no period is fixed, within a
stated period not less than thirty days after the notification. If
the goods are not removed before the date specified in the
notification, the warehouseman may sell them in accordance with the
provisions of the section on enforcement of a warehouseman's lien
(Section 7.210).
[(b) If a warehouseman in good faith believes that the goods
are about to deteriorate or decline in value to less than the amount
of his lien within the time prescribed in Subsection (a) for
notification, advertisement and sale, the warehouseman may specify
in the notification any reasonable shorter time for removal of the
goods and in case the goods are not removed, may sell them at public
sale held not less than one week after a single advertisement or
posting.
[(c) If as a result of a quality or condition of the goods of
which the warehouseman had no notice at the time of deposit the
goods are a hazard to other property or to the warehouse or to
persons, the warehouseman may sell the goods at public or private
sale without advertisement on reasonable notification to all
persons known to claim an interest in the goods. If the
warehouseman after a reasonable effort is unable to sell the goods
he may dispose of them in any lawful manner and shall incur no
liability by reason of such disposition.
[(d) The warehouseman must deliver the goods to any person
entitled to them under this chapter upon due demand made at any time
prior to sale or other disposition under this section.
[(e) The warehouseman may satisfy his lien from the proceeds
of any sale or disposition under this section but must hold the
balance for delivery on the demand of any person to whom he would
have been bound to deliver the goods.
[Sec. 7.207. GOODS MUST BE KEPT SEPARATE; FUNGIBLE GOODS.
(a) Unless the warehouse receipt otherwise provides, a
warehouseman must keep separate the goods covered by each receipt
so as to permit at all times identification and delivery of those
goods except that different lots of fungible goods may be
commingled.
[(b) Fungible goods so commingled are owned in common by the
persons entitled thereto and the warehouseman is severally liable
to each owner for that owner's share. Where because of overissue a
mass of fungible goods is insufficient to meet all the receipts
which the warehouseman has issued against it, the persons entitled
include all holders to whom overissued receipts have been duly
negotiated.
[Sec. 7.208. ALTERED WAREHOUSE RECEIPTS. Where a blank in a
negotiable warehouse receipt has been filled in without authority,
a purchaser for value and without notice of the want of authority
may treat the insertion as authorized. Any other unauthorized
alteration leaves any receipt enforceable against the issuer
according to its original tenor.
[Sec. 7.209. LIEN OF WAREHOUSEMAN. (a)(1) A warehouseman
has a lien against the bailor on the goods covered by a warehouse
receipt or on the proceeds thereof in his possession for charges for
storage or transportation (including demurrage and terminal
charges), insurance, labor, or 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.
[(2) If the person on whose account the goods are held
is liable for like charges or expenses in relation to other goods
whenever deposited and it is stated in the receipt that a lien is
claimed for charges and expenses in relation to other goods, the
warehouseman also has a lien against him for such charges and
expenses whether or not the other goods have been delivered by the
warehouseman. But against a person to whom a negotiable warehouse
receipt is duly negotiated a warehouseman's lien is limited to
charges in an amount or at a rate specified on the receipt or if no
charges are so specified then to a reasonable charge for storage of
the goods covered by the receipt subsequent to the date of the
receipt.
[(b) The warehouseman may also reserve a security interest
against the bailor for a maximum amount specified on the receipt for
charges other than those specified in Subsection (a), such as for
money advanced and interest. Such a security interest is governed
by the chapter on Secured Transactions (Chapter 9).
[(c) A warehouseman's lien for a security interest under
Subsection (b) is effective against any person who so entrusted the
bailor with possession of the goods that a pledge of them by him to a
good faith purchaser for value would have been valid but is not
effective against a person as to whom the document confers no right
in the goods covered by it under Section 7.503. However, the
warehouseman's specific lien for charges and expenses under
Subsection (a)(1) is effective against any security interest. If
the warehouseman learns of a perfected security interest owned by a
person as to whom the document confers no right in the goods covered
by it under Section 7.503 against the goods and fails thereafter to
give such secured party (Section 9.105) written notice of the
accrued and unpaid charges and expenses at the time when they have
accrued for between two and six months, then the warehouseman's
specific lien under Subsection (a)(1) is effective as against such
secured party only with respect to unpaid charges and expenses
which have accrued by the end of six months.
[(d) A warehouseman loses his lien on any goods which he
voluntarily delivers or which he unjustifiably refuses to deliver.
[Sec. 7.210. ENFORCEMENT OF WAREHOUSEMAN'S LIEN. (a)
Except as provided in Subsection (b), a warehouseman's lien may be
enforced by public or private sale of the goods in block or in
parcels, at any time or place and on any terms which are
commercially reasonable, after notifying all persons known to claim
an interest in the goods. Such notification must 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 is not of
itself sufficient to establish that the sale was not made in a
commercially reasonable manner. If the warehouseman either sells
the goods in the usual manner in any recognized market therefor, or
if he sells at the price current in such market at the time of his
sale, or if he has otherwise sold 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.
[(b) A warehouseman's lien on goods other than goods stored
by a merchant in the course of his business may be enforced only as
follows:
[(1) All persons known to claim an interest in the
goods must be notified.
[(2) The notification must be delivered in person or
sent by registered or certified letter to the last known address of
any person to be notified.
[(3) The notification must 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.
[(4) The sale must conform to the terms of the
notification.
[(5) The sale must be held at the nearest suitable
place to that where the goods are held or stored.
[(6) After the expiration of the time given in the
notification, an advertisement of the sale must 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
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 take place at least fifteen days after the first
publication. If there is no newspaper of general circulation where
the sale is to be held, the advertisement must be posted at least
ten days before the sale in not less than six conspicuous places in
the neighborhood of the proposed sale.
[(c) Before any sale pursuant to this section any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred under this
section. In that event the goods must not be sold, but must be
retained by the warehouseman subject to the terms of the receipt and
this chapter.
[(d) The warehouseman may buy at any public sale pursuant to
this section.
[(e) A purchaser in good faith of goods sold to enforce a
warehouseman's lien takes the goods free of any rights of persons
against whom the lien was valid, despite noncompliance by the
warehouseman with the requirements of this section.
[(f) The warehouseman may satisfy his lien from the proceeds
of any sale pursuant to this section but must hold the balance, if
any, for delivery on demand to any person to whom he would have been
bound to deliver the goods.
[(g) The rights provided by this section shall be in
addition to all other rights allowed by law to a creditor against
his debtor.
[(h) Where a lien is on goods stored by a merchant in the
course of his business the lien may be enforced in accordance with
either Subsection (a) or (b).
[(i) The warehouseman is liable for damages caused by
failure to comply with the requirements for sale under this section
and in case of willful violation is liable for conversion.
[SUBCHAPTER C. BILLS OF LADING: SPECIAL PROVISIONS
[Sec. 7.301. LIABILITY FOR NON-RECEIPT OR MISDESCRIPTION;
"SAID TO CONTAIN"; "SHIPPER'S LOAD AND COUNT"; IMPROPER HANDLING.
(a) A consignee of a non-negotiable bill who has given value in
good faith or a holder to whom a negotiable bill has been duly
negotiated relying in either case upon the description therein of
the goods, or upon the date therein shown, may recover from the
issuer damages caused by the misdating of the bill or the
non-receipt or misdescription of the goods, except to the extent
that the document indicates that the issuer does not know whether
any part or all of the goods in fact were received or conform to the
description, as where 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, if such indication be true.
[(b) When goods are loaded by an issuer who is a common
carrier, the issuer must count the packages of goods if package
freight and ascertain the kind and quantity if bulk freight. In
such cases "shipper's weight, load and count" or other words
indicating that the description was made by the shipper are
ineffective except as to freight concealed by packages.
[(c) When bulk freight is loaded by a shipper who makes
available to the issuer adequate facilities for weighing such
freight, an issuer who is a common carrier must ascertain the kind
and quantity within a reasonable time after receiving the written
request of the shipper to do so. In such cases "shipper's weight"
or other words of like purport are ineffective.
[(d) The issuer may by inserting in the bill the words
"shipper's weight, load and count" or other words of like purport
indicate that the goods were loaded by the shipper; and if such
statement be true the issuer shall not be liable for damages caused
by the improper loading. But their omission does not imply
liability for such damages.
[(e) The shipper shall be deemed to have guaranteed to the
issuer the accuracy at the time of shipment of the description,
marks, labels, number, kind, quantity, condition and weight, as
furnished by him; and the shipper shall indemnify the issuer
against damage caused by inaccuracies in such particulars. The
right of the issuer to such indemnity shall in no way limit his
responsibility and liability under the contract of carriage to any
person other than the shipper.
[Sec. 7.302. THROUGH BILLS OF LADING AND SIMILAR DOCUMENTS.
(a) The issuer of a through bill of lading or other document
embodying an undertaking to be performed in part by persons acting
as its agents or by connecting carriers is liable to anyone entitled
to recover on the document for any breach by such other persons or
by a connecting carrier of its obligation under the document but to
the extent that the bill 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 may be varied by agreement of the
parties.
[(b) Where goods covered by a through bill of lading or
other document embodying an undertaking to be performed in part by
persons other than the issuer are received by any such person, he is
subject with respect to his own performance while the goods are in
his possession to the obligation of the issuer. His obligation is
discharged by delivery of the goods to another such person pursuant
to the document, and does not include liability for breach by any
other such persons or by the issuer.
[(c) The issuer of such through bill of lading or other
document shall be entitled to recover from the connecting carrier
or such other person in possession of the goods when the breach of
the obligation under the document occurred, the amount it may be
required to pay to anyone entitled to recover on the document
therefor, as may be evidenced by any receipt, judgment, or
transcript thereof, and the amount of any expense reasonably
incurred by it in defending any action brought by anyone entitled to
recover on the document therefor.
[Sec. 7.303. DIVERSION; RECONSIGNMENT; CHANGE OF
INSTRUCTIONS. (a) Unless the bill of lading otherwise provides,
the carrier may deliver the goods to a person or destination other
than that stated in the bill or may otherwise dispose of the goods
on instructions from
[(1) the holder of a negotiable bill; or
[(2) the consignor on a non-negotiable bill
notwithstanding contrary instructions from the consignee; or
[(3) the consignee on a non-negotiable 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 bill; or
[(4) the consignee on a non-negotiable bill if he is
entitled as against the consignor to dispose of them.
[(b) Unless such instructions are noted on a negotiable bill
of lading, a person to whom the bill is duly negotiated can hold the
bailee according to the original terms.
[Sec. 7.304. BILLS OF LADING IN A SET. (a) Except where
customary in overseas transportation, a bill of lading must not be
issued in a set of parts. The issuer is liable for damages caused by
violation of this subsection.
[(b) Where a bill of lading is lawfully drawn in a set of
parts, each of which is numbered and expressed to be valid only if
the goods have not been delivered against any other part, the whole
of the parts constitute one bill.
[(c) Where a 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 the first due negotiation is made
prevails as to both the document and the goods even though any later
holder may have received the goods from the carrier in good faith
and discharged the carrier's obligation by surrender of his part.
[(d) Any person who negotiates or transfers a single part of
a bill of lading drawn in a set is liable to holders of that part as
if it were the whole set.
[(e) The bailee is obliged to deliver in accordance with
Subchapter D of this chapter against the first presented part of a
bill of lading lawfully drawn in a set. Such delivery discharges
the bailee's obligation on the whole bill.
[Sec. 7.305. DESTINATION BILLS. (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 procure the bill to be issued at
destination or at any other place designated in the request.
[(b) Upon request of anyone entitled as against the carrier
to control the goods while in transit and on surrender of any
outstanding bill of lading or other receipt covering such goods,
the issuer may procure a substitute bill to be issued at any place
designated in the request.
[Sec. 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.
[Sec. 7.307. LIEN OF CARRIER. (a) A carrier has a lien on
the goods covered by a bill of lading for charges subsequent to the
date of its 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 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.
[(b) A lien for charges and expenses under Subsection (a) on
goods which 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 charges and
expenses. Any other lien under Subsection (a) is effective against
the consignor and any person who permitted the bailor to have
control or possession of the goods unless the carrier had notice
that the bailor lacked such authority.
[(c) A carrier loses his lien on any goods which he
voluntarily delivers or which he unjustifiably refuses to deliver.
[Sec. 7.308. ENFORCEMENT OF CARRIER'S LIEN. (a) A
carrier's lien may be enforced by public or private sale of the
goods, in block or in parcels, at any time or place and on any terms
which are commercially reasonable, after notifying all persons
known to claim an interest in the goods. Such notification must
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 carrier is not of
itself sufficient to establish that the sale was not made in a
commercially reasonable manner. If the carrier either sells the
goods in the usual manner in any recognized market therefor or if he
sells at the price current in such market at the time of his sale or
if he has otherwise sold 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.
[(b) Before any sale pursuant to this section any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred under this
section. In that event the goods must not be sold, but must be
retained by the carrier subject to the terms of the bill and this
chapter.
[(c) The carrier may buy at any public sale pursuant to this
section.
[(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 the lien was valid, despite noncompliance by the carrier with
the requirements of this section.
[(e) The carrier may satisfy his lien from the proceeds of
any sale pursuant to this section but must hold the balance, if any,
for delivery on demand to any person to whom he would have been
bound to deliver the goods.
[(f) The rights provided by this section shall be in
addition to all other rights allowed by law to a creditor against
his debtor.
[(g) A carrier's lien may be enforced in accordance with
either Subsection (a) or the procedure set forth in Subsection (b)
of Section 7.210.
[(h) The carrier is liable for damages caused by failure to
comply with the requirements for sale under this section and in case
of willful violation is liable for conversion.
[Sec. 7.309. DUTY OF CARE; CONTRACTUAL LIMITATION OF
CARRIER'S LIABILITY. (a) A carrier who issues a bill of lading
whether negotiable or non-negotiable must exercise the degree of
care in relation to the goods which a reasonably careful man would
exercise under like circumstances. This subsection does not repeal
or change any law or rule of law which imposes liability upon a
common carrier for damages not caused by its negligence.
[(b) Damages may be limited by a provision that the
carrier's liability shall not exceed a value stated in the document
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 is otherwise advised of such opportunity; but no
such limitation is effective with respect to the carrier's
liability for conversion to its own use.
[(c) Reasonable provisions as to the time and manner of
presenting claims and instituting actions based on the shipment may
be included in a bill of lading or tariff.
[SUBCHAPTER D. WAREHOUSE RECEIPTS AND BILLS OF LADING: GENERAL
OBLIGATIONS
[Sec. 7.401. IRREGULARITIES IN ISSUE OF RECEIPT OR BILL OR
CONDUCT OF ISSUER. The obligations imposed by this chapter on an
issuer apply to a document of title regardless of the fact that
[(1) the document may not comply with the requirements
of this chapter or of any other law or regulation regarding its
issue, form or content; or
[(2) the issuer may have violated laws regulating the
conduct of his business; or
[(3) the goods covered by the document were owned by
the bailee at the time the document was issued; or
[(4) the person issuing the document does not come
within the definition of warehouseman if it purports to be a
warehouse receipt.
[Sec. 7.402. DUPLICATE RECEIPT OR BILL; OVERISSUE. Neither
a duplicate nor any other document of title purporting to cover
goods already represented by an outstanding document of the same
issuer confers any right in the goods, except as provided in the
case of bills in a set, overissue of documents for fungible goods
substitutes for lost, stolen or destroyed documents. But the
issuer is liable for damages caused by his overissue or failure to
identify a duplicate document as such by conspicuous notation on
its face.
[Sec. 7.403. OBLIGATION OF WAREHOUSEMAN OR CARRIER TO
DELIVER; EXCUSE. (a) The bailee must deliver the goods to a person
entitled under the document who complies with Subsections (b) and
(c), unless and to the extent that the bailee establishes any of the
following:
[(1) delivery of the goods to a person whose receipt
was rightful as against the claimant;
[(2) damage to or delay, loss or destruction of the
goods for which the bailee is not liable, but the burden of
establishing negligence in case of damage or destruction by fire is
on the person entitled under the document;
[(3) previous sale or other disposition of the goods
in lawful enforcement of a lien or on warehouseman's lawful
termination of storage;
[(4) the exercise by a seller of his right to stop
delivery pursuant to the provisions of the chapter on Sales
(Section 2.705);
[(5) a diversion, reconsignment or other disposition
pursuant to the provisions of this chapter (Section 7.303) or
tariff regulating such right;
[(6) release, satisfaction or any other fact affording
a personal defense against the claimant;
[(7) any other lawful excuse.
[(b) A person claiming goods covered by a document of title
must satisfy the bailee's lien where the bailee so requests or where
the bailee is prohibited by law from delivering the goods until the
charges are paid.
[(c) Unless the person claiming is one against whom the
document confers no right under Section 7.503(a), he must surrender
for cancellation or notation of partial deliveries any outstanding
negotiable document covering the goods, and the bailee must cancel
the document or conspicuously note the partial delivery thereon or
be liable to any person to whom the document is duly negotiated.
[(d) "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 non-negotiable document.
[Sec. 7.404. NO LIABILITY FOR GOOD FAITH DELIVERY PURSUANT
TO RECEIPT OR BILL. A bailee who in good faith including observance
of reasonable commercial standards has received goods and delivered
or otherwise disposed of them according to the terms of the document
of title or pursuant to this chapter is not liable therefor. This
rule applies even though the person from whom he received the goods
had no authority to procure the document or to dispose of the goods
and even though the person to whom he delivered the goods had no
authority to receive them.
[SUBCHAPTER E. WAREHOUSE RECEIPTS AND BILLS OF LADING: NEGOTIATION
AND TRANSFER
[Sec. 7.501. FORM OF NEGOTIATION AND REQUIREMENTS OF "DUE
NEGOTIATION". (a) A negotiable document of title running to the
order of a named person is negotiated by his indorsement and
delivery. After his indorsement in blank or to bearer any person
can negotiate it by delivery alone.
[(b)(1) A negotiable document of title is also negotiated by
delivery alone when by its original terms it runs to bearer.
[(2) When a document running to the order of a named
person is delivered to him the effect is the same as if the document
had been negotiated.
[(c) Negotiation of a negotiable document of title after it
has been indorsed to a specified person requires indorsement by the
special indorsee as well as delivery.
[(d) A negotiable document of title is "duly negotiated"
when it is negotiated in the manner stated in this section to a
holder who 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.
[(e) Indorsement of a non-negotiable document neither makes
it negotiable nor adds to the transferee's rights.
[(f) The naming in a negotiable bill of a person to be
notified of the arrival of the goods does not limit the
negotiability of the bill nor constitute notice to a purchaser
thereof of any interest of such person in the goods.
[Sec. 7.502. RIGHTS ACQUIRED BY DUE NEGOTIATION. (a)
Subject to the following section and to the provisions of Section
7.205 on fungible goods, a holder to whom a negotiable document of
title has been duly negotiated acquires thereby:
[(1) title to the document;
[(2) title to the goods;
[(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
[(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 except those arising under the terms of the
document or under this chapter. In the case of a delivery order the
bailee's obligation accrues only upon acceptance and the obligation
acquired by the holder is that the issuer and any indorser will
procure the acceptance of the bailee.
[(b) Subject to the following section, title and rights so
acquired are not defeated by any stoppage of the goods represented
by the document or by surrender of such goods by the bailee, and are
not impaired even though the negotiation or any prior negotiation
constituted a breach of duty or even though any person has been
deprived of possession of the document by misrepresentation, fraud,
accident, mistake, duress, loss, theft or conversion, or even
though a previous sale or other transfer of the goods or document
has been made to a third person.
[Sec. 7.503. DOCUMENT OF TITLE TO GOODS DEFEATED IN CERTAIN
CASES. (a) A document of title confers no right in goods against a
person who before issuance of the document had a legal interest or a
perfected security interest in them and who neither
[(1) delivered or entrusted them or any document of
title covering them to the bailor or his nominee with actual or
apparent authority to ship, store or sell or with power to obtain
delivery under this chapter (Section 7.403) or with power of
disposition under this title (Sections 2.403 and 9.320) or other
statute or rule of law; nor
[(2) acquiesced in the procurement by the bailor or
his nominee of any document of title.
[(b) Title to goods based upon an unaccepted delivery order
is subject to the rights of anyone to whom a negotiable warehouse
receipt or bill of lading covering the goods has been duly
negotiated. Such a title may be defeated under the next section to
the same extent as the rights of the issuer or a transferee from the
issuer.
[(c) Title to goods based upon a bill of lading issued to a
freight forwarder is subject to the rights of anyone to whom a bill
issued by the freight forwarder is duly negotiated; but delivery by
the carrier in accordance with Subchapter D of this chapter
pursuant to its own bill of lading discharges the carrier's
obligation to deliver.
[Sec. 7.504. RIGHTS ACQUIRED IN THE ABSENCE OF DUE
NEGOTIATION; EFFECT OF DIVERSION; SELLER'S STOPPAGE OF DELIVERY.
(a) A transferee of a document, whether negotiable or
non-negotiable, to whom the document has been delivered but not
duly negotiated, acquires the title and rights which his transferor
had or had actual authority to convey.
[(b) In the case of a non-negotiable document, until but not
after the bailee receives notification of the transfer, the rights
of the transferee may be defeated
[(1) by those creditors of the transferor who could
treat the sale as void under Section 2.402; or
[(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 rights; or
[(3) as against the bailee by good faith dealings of
the bailee with the transferor.
[(c) A diversion or other change of shipping instructions by
the consignor in a non-negotiable bill of lading which causes the
bailee not to deliver to the consignee defeats the consignee's
title to the goods if they have been delivered to a buyer in
ordinary course of business and in any event defeats the
consignee's rights against the bailee.
[(d) Delivery pursuant to a non-negotiable document may be
stopped by a seller under Section 2.705, and subject to the
requirement of due notification there provided. A bailee honoring
the seller's instructions is entitled to be indemnified by the
seller against any resulting loss or expense.
[Sec. 7.505. INDORSER NOT A GUARANTOR FOR OTHER PARTIES.
The indorsement of a document of title issued by a bailee does not
make the indorser liable for any default by the bailee or by
previous indorsers.
[Sec. 7.506. DELIVERY WITHOUT INDORSEMENT: RIGHT TO COMPEL
INDORSEMENT. The transferee of a negotiable document of title has a
specifically enforceable right to have his transferor supply any
necessary indorsement but the transfer becomes a negotiation only
as of the time the indorsement is supplied.
[Sec. 7.507. WARRANTIES ON NEGOTIATION OR TRANSFER OF
RECEIPT OR BILL. Where a person negotiates or transfers a document
of title for value otherwise than as a mere intermediary under the
next following section, then unless otherwise agreed he warrants to
his immediate purchaser only in addition to any warranty made in
selling the goods
[(1) that the document is genuine; and
[(2) that he has no knowledge of any fact which would
impair its validity or worth; and
[(3) that his negotiation or transfer is rightful and
fully effective with respect to the title to the document and the
goods it represents.
[Sec. 7.508. WARRANTIES OF COLLECTING BANK AS TO DOCUMENTS.
A collecting bank or other intermediary known to be entrusted with
documents on behalf of another or with collection of a draft or
other claim against delivery of documents warrants by such delivery
of the documents only its own good faith and authority. This rule
applies even though the intermediary has purchased or made advances
against the claim or draft to be collected.
[Sec. 7.509. RECEIPT OR BILL: WHEN ADEQUATE COMPLIANCE
WITH COMMERCIAL CONTRACT. The question whether a document is
adequate to fulfill the obligations of a contract for sale or the
conditions of a credit is governed by the chapters on Sales (Chapter
2) and on Letters of Credit (Chapter 5).
[SUBCHAPTER F. WAREHOUSE RECEIPTS AND BILLS OF LADING:
MISCELLANEOUS PROVISIONS
[Sec. 7.601. LOST AND MISSING DOCUMENTS. (a) If a document
has been 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 order. If the
document was negotiable the claimant must post security approved by
the court to indemnify any person who may suffer loss as a result of
a non-surrender of the document. If the document was not
negotiable, such security may be required at the discretion of the
court. The court may also in its discretion order payment of the
bailee's reasonable costs and counsel fees.
[(b) A bailee who without court order delivers goods to a
person claiming under a missing negotiable document is liable to
any person injured thereby, and if the delivery is not in good faith
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 files a notice of claim within
one year after the delivery.
[Sec. 7.602. ATTACHMENT OF GOODS COVERED BY A NEGOTIABLE
DOCUMENT. Except where the document was originally issued upon
delivery of the goods by a person who had no power to dispose of
them, no lien attaches by virtue of any judicial process to goods in
the possession of a bailee for which a negotiable document of title
is outstanding unless the document be first surrendered to the
bailee or its negotiation enjoined, and the bailee shall not be
compelled to deliver the goods pursuant to process until the
document is surrendered to him or impounded by the court. One who
purchases the document for value without notice of the process or
injunction takes free of the lien imposed by judicial process.
[Sec. 7.603. CONFLICTING CLAIMS; INTERPLEADER. If more
than one person claims title or possession of the goods, the bailee
is excused from delivery until he has had a reasonable time to
ascertain the validity of the adverse claims or to bring an action
to compel all claimants to interplead and may compel such
interpleader, either in defending an action for non-delivery of the
goods, or by original action, whichever is appropriate.]
SECTION 2. Sections 1.201(b)(5), (6), (15), (16), (21), and
(42), Business & Commerce Code, are amended to read as follows:
(5) "Bearer" means a person in control of a negotiable
electronic document of title or a person in possession of a
negotiable instrument, a negotiable tangible document of title, or
a certificated security that is 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. The term does not include a warehouse receipt.
(15) "Delivery," with respect to an electronic
document of title, means voluntary transfer of control, and with
respect to an instrument, a tangible document of title, or chattel
paper, means voluntary transfer of possession.
(16) "Document of title" means a record that [includes
bill of lading, dock warrant, dock receipt, warehouse receipt or
order for the delivery of goods, and also any other document which]
in the regular course of business or financing is treated as
adequately evidencing that the person in possession or control of
the record [it] is entitled to receive, control, hold, and dispose
of the record [document] and the goods the record [it] covers, and
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. An electronic
document of title is evidenced by a record consisting of
information stored in an electronic medium. A tangible document of
title is evidenced by a record consisting of information that is
inscribed on a tangible medium. [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.]
(21) "Holder" means:
(A) the person in possession of a negotiable
instrument that is payable either to bearer or to an identified
person that is the person in possession; [or]
(B) the person in possession of a negotiable
tangible document of title if the goods are deliverable either to
bearer or to the order of the person in possession; or
(C) a person in control of a negotiable
electronic document of title.
(42) "Warehouse receipt" means a document of title
[receipt] issued by a person engaged in the business of storing
goods for hire.
SECTION 3. Section 2.103(c), Business & Commerce Code, is
amended to read as follows:
(c) The following definitions in other chapters apply to
this chapter:
"Check". Section 3.104.
"Consignee". Section 7.102.
"Consignor". Section 7.102.
"Consumer goods". Section 9.102.
"Control". Section 7.106.
"Dishonor". Section 3.502.
"Draft". Section 3.104.
SECTION 4. Section 2.104(b), Business & Commerce Code, is
amended to read as follows:
(b) "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 (Section 2.707).
SECTION 5. Section 2.310, Business & Commerce Code, is
amended to read as follows:
Sec. 2.310. OPEN TIME FOR PAYMENT OR RUNNING OF CREDIT;
AUTHORITY TO SHIP UNDER RESERVATION. Unless otherwise agreed
(1) 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
(2) if the seller is authorized to send the goods he
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 (Section 2.513); and
(3) if delivery is authorized and made by way of
documents of title otherwise than by Subdivision (2) then payment
is due regardless of where the goods are to be received:
(A) at the time and place at which the buyer is to
receive delivery of the tangible documents; or
(B) 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 [regardless of where the goods are
to be received]; and
(4) where the seller is required or authorized to ship
the goods on credit the credit period runs from the time of shipment
but post-dating the invoice or delaying its dispatch will
correspondingly delay the starting of the credit period.
SECTION 6. Section 2.401(c), Business & Commerce Code, is
amended to read as follows:
(c) Unless otherwise explicitly agreed where delivery is to
be made without moving the goods,
(1) if the seller is to deliver a tangible document of
title, title passes at the time when and the place where he delivers
such documents and if the seller is to deliver an electronic
document of title, title passes when the seller delivers the
document; or
(2) if the goods are at the time of contracting already
identified and no documents are to be delivered, title passes at the
time and place of contracting.
SECTION 7. Section 2.503(e), Business & Commerce Code, is
amended to read as follows:
(e) Where the contract requires the seller to deliver
documents
(1) he must tender all such documents in correct form,
except as provided in this chapter with respect to bills of lading
in a set (Subsection (b) of Section 2.323); and
(2) tender through customary banking channels is
sufficient and dishonor of a draft accompanying or associated with
the documents constitutes non-acceptance or rejection.
SECTION 8. Section 2.505, Business & Commerce Code, is
amended to read as follows:
Sec. 2.505. SELLER'S SHIPMENT UNDER RESERVATION. (a)
Where the seller has identified goods to the contract by or before
shipment:
(1) his procurement of a negotiable bill of lading to
his own order or otherwise reserves in him a security interest in
the goods. His 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.
(2) a non-negotiable bill of lading to himself or his
nominee reserves possession of the goods as security but except in a
case of conditional delivery (Subsection (b) of Section 2.507) a
non-negotiable 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.
(b) 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 the
preceding section 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 9. Section 2.506(b), Business & Commerce Code, is
amended to read as follows:
(b) 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 10. Section 2.509(b), Business & Commerce Code, is
amended to read as follows:
(b) Where the goods are held by a bailee to be delivered
without being moved, the risk of loss passes to the buyer
(1) on the buyer's [his] receipt of possession or
control of a negotiable document of title covering the goods; or
(2) on acknowledgment by the bailee of the buyer's
right to possession of the goods; or
(3) after the buyer's [his] receipt of possession or
control of a non-negotiable document of title or other written
direction to deliver, as provided in Subsection (d)(2) of Section
2.503.
SECTION 11. Section 2.605(b), Business & Commerce Code, is
amended to read as follows:
(b) Payment against documents made without reservation of
rights precludes recovery of the payment for defects apparent in
[on the face of] the documents.
SECTION 12. Sections 2.705(b) and (c), Business & Commerce
Code, are amended to read as follows:
(b) As against such buyer the seller may stop delivery until
(1) receipt of the goods by the buyer; or
(2) acknowledgment to the buyer by any bailee of the
goods except a carrier that the bailee holds the goods for the
buyer; or
(3) such acknowledgment to the buyer by a carrier by
reshipment or as a warehouse [warehouseman]; or
(4) negotiation to the buyer of any negotiable
document of title covering the goods.
(c)(1) To stop delivery the seller must so notify as to
enable the bailee by reasonable diligence to prevent delivery of
the goods.
(2) After such notification the bailee must 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.
(3) 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.
(4) A carrier who has issued a non-negotiable bill of
lading is not obliged to obey a notification to stop received from a
person other than the consignor.
SECTION 13. Sections 2A.103(a)(1) and (15), Business &
Commerce Code, are amended to read as follows:
(1) "Buyer in the 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 the
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 acquiring [receiving] goods or documents of
title under a preexisting 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.
(15) "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 acquiring [receiving] goods or
documents of title under a preexisting 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 14. Section 2A.514(b), Business & Commerce Code, is
amended to read as follows:
(b) A lessee's failure to reserve rights when paying rent or
other consideration against documents precludes recovery of the
payment for defects apparent in [on the face of] the documents.
SECTION 15. Section 2A.526(b), Business & Commerce Code, is
amended to read as follows:
(b) In pursuing its remedies under Subsection (a), the
lessor may stop delivery until:
(1) receipt of the goods by the lessee;
(2) acknowledgement to the lessee by any bailee of the
goods, except a carrier, that the bailee holds the goods for the
lessee; or
(3) such an acknowledgement to the lessee by a carrier
via reshipment or as a warehouse [warehouseman].
SECTION 16. Section 4.104(c), Business & Commerce Code, is
amended to read as follows:
(c) The following definitions in other chapters apply to
this chapter:
"Acceptance" Section 3.409.
"Alteration" Section 3.407.
"Cashier's check" Section 3.104.
"Certificate of deposit" Section 3.104.
"Certified check" Section 3.409.
"Check" Section 3.104.
"Control" Section 7.106.
"Holder in due course" Section 3.302.
"Instrument" Section 3.104.
"Notice of dishonor" Section 3.503.
"Order" Section 3.103.
"Ordinary care" Section 3.103.
"Person entitled to enforce" Section 3.301.
"Presentment" Section 3.501.
"Promise" Section 3.103.
"Prove" Section 3.103.
"Teller's check" Section 3.104.
"Unauthorized signature" Section 3.403.
SECTION 17. Section 4.210(c), Business & Commerce Code, is
amended to read as follows:
(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 Chapter 9, but:
(1) no security agreement is necessary to make the
security interest enforceable (Section 9.203(b)(3)(A));
(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 18. Section 8.103, Business & Commerce Code, is
amended by adding Subsection (g) to read as follows:
(g) A document of title, as defined in Section 1.201(b)(16),
is not a financial asset unless Section 8.102(a)(9)(C) applies.
SECTION 19. Section 9.102(b), Business & Commerce Code, is
amended to read as follows:
(b) The following definitions in other chapters apply to
this chapter:
"Applicant" Section 5.102.
"Beneficiary" Section 5.102.
"Broker" Section 8.102.
"Certificated security" Section 8.102.
"Check" Section 3.104.
"Clearing corporation" Section 8.102.
"Contract for sale" Section 2.106.
"Control" (with respect to a document of title) Section 7.106.
"Customer" Section 4.104.
"Entitlement holder" Section 8.102.
"Financial asset" Section 8.102.
"Holder in due course" Section 3.302.
"Issuer" (with respect to a letter of credit
or letter-of-credit right) Section 5.102.
"Issuer" (with respect to a security) Section 8.201.
"Lease" Section 2A.103.
"Lease agreement" Section 2A.103.
"Lease contract" Section 2A.103.
"Leasehold interest" Section 2A.103.
"Lessee" Section 2A.103.
"Lessee in ordinary course of business" Section 2A.103.
"Lessor" Section 2A.103.
"Lessor's residual interest" Section 2A.103.
"Letter of credit" Section 5.102.
"Merchant" Section 2.104.
"Negotiable instrument" Section 3.104.
"Nominated person" Section 5.102.
"Note" Section 3.104.
"Proceeds of a letter of credit" Section 5.114.
"Prove" Section 3.103.
"Sale" Section 2.106.
"Securities account" Section 8.501.
"Securities intermediary" Section 8.102.
"Security" Section 8.102.
"Security certificate" Section 8.102.
"Security entitlement" Section 8.102.
"Uncertificated security" Section 8.102.
SECTION 20. Section 9.203(b), Business & Commerce Code, is
amended to read as follows:
(b) Except as otherwise provided in Subsections (c)-(j), 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 Section 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 Section 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 Section 7.106, 9.104, 9.105, 9.106, or
9.107 pursuant to the debtor's security agreement.
SECTION 21. Section 9.207(c), Business & Commerce Code, is
amended to read as follows:
(c) Except as otherwise provided in Subsection (d), a
secured party having possession of collateral or control of
collateral under Section 7.106, 9.104, 9.105, 9.106, or 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 22. Section 9.208(b), Business & Commerce Code, is
amended to read as follows:
(b) Within 10 days after receiving an authenticated demand
by the debtor:
(1) a secured party having control of a deposit
account under Section 9.104(a)(2) 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 Section 9.104(a)(3) 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 Section 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 that 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 Section 8.106(d)(2) or 9.106(b) 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 Section 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
authoritative copy which add or change an identified assignee of
the authoritative copy without the consent of the secured party.
SECTION 23. Section 9.301, Business & Commerce Code, is
amended to read as follows:
Sec. 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS. Except as otherwise provided in Sections 9.303
through 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 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 Subdivision (4),
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; and
(C) the effect of perfection or nonperfection and
the priority of a nonpossessory security interest in the
collateral.
(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 24. Section 9.310(b), Business & Commerce Code, is
amended to read as follows:
(b) The filing of a financing statement is not necessary to
perfect a security interest:
(1) that is perfected under Section 9.308(d), (e),
(f), or (g);
(2) that is perfected under Section 9.309 when it
attaches;
(3) in property subject to a statute, regulation, or
treaty described in Section 9.311(a);
(4) in goods in possession of a bailee that is
perfected under Section 9.312(d)(1) or (2);
(5) in certificated securities, documents, goods, or
instruments which is perfected without filing, control or
possession under Section 9.312(e), (f), or (g);
(6) in collateral in the secured party's possession
under Section 9.313;
(7) in a certificated security that is perfected by
delivery of the security certificate to the secured party under
Section 9.313;
(8) in deposit accounts, electronic chattel paper,
electronic documents, investment property, or letter-of-credit
rights that is perfected by control under Section 9.314;
(9) in proceeds that is perfected under Section 9.315;
(10) that is perfected under Section 9.316; or
(11) in oil or gas production or their proceeds under
Section 9.343.
SECTION 25. Section 9.312(e), Business & Commerce Code, is
amended to read as follows:
(e) 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 26. Section 9.313(a), Business & Commerce Code, is
amended to read as follows:
(a) Except as otherwise provided in Subsection (b), 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 Section 8.301.
SECTION 27. Sections 9.314(a) and (b), Business & Commerce
Code, are amended to read as follows:
(a) 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 Section 7.106, 9.104, 9.105, 9.106, or 9.107.
(b) A security interest in deposit accounts, electronic
chattel paper, [or] letter-of-credit rights, or electronic
documents is perfected by control under Section 7.106, 9.104,
9.105, or 9.107 when the secured party obtains control and remains
perfected by control only while the secured party retains control.
SECTION 28. Sections 9.317(b) and (d), Business & Commerce
Code, are amended to read as follows:
(b) Except as otherwise provided in Subsection (e), 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) 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 29. Section 9.338, Business & Commerce Code, is
amended to read as follows:
Sec. 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 Section 9.516(b)(5) that 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.
SECTION 30. Section 9.601(b), Business & Commerce Code, is
amended to read as follows:
(b) A secured party in possession of collateral or control
of collateral under Section 7.106, 9.104, 9.105, 9.106, or 9.107
has the rights and duties provided in Section 9.207.
SECTION 31. 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 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 32. A document of title issued or a bailment that
arises before the effective date of this Act and the rights,
obligations, and interests flowing from that document or bailment
are governed by any statute or other rule amended or repealed by
this Act as if amendment or repeal had not occurred and may be
terminated, completed, consummated, or enforced under that statute
or other rule.
SECTION 33. This Act takes effect September 1, 2005.