§ 6A-7-504 - Rights acquired in absence of due negotiation – Effect of diversion – Stoppage of delivery.
SECTION 6A-7-504
§ 6A-7-504 Rights acquired in absence ofdue 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 thetitle and rights that its transferor had or had actual authority to convey.
(b) In the case of a transfer of a nonnegotiable document oftitle, until but not after the bailee receives notice of the transfer, therights of the transferee may be defeated:
(1) By those creditors of the transferor which could treatthe transfer as void under § 6A-2-402 or 6A-2.1-308;
(2) By a buyer from the transferor in ordinary course ofbusiness if the bailee has delivered the goods to the buyer or receivednotification of the buyer's rights;
(3) By a lessee from the transferor in ordinary course ofbusiness if the bailee has delivered the goods to the lessee or receivednotification of the lessee's rights; or
(4) As against the bailee, by good-faith dealings of thebailee with the transferor.
(c) A diversion or other change of shipping instructions bythe consignor in a nonnegotiable bill of lading which causes the bailee not todeliver the goods to the consignee defeats the consignee's title to the goodsif the goods have been delivered to a buyer in ordinary course of business or alessee in ordinary course of business and, in any event, defeats theconsignee's rights against the bailee.
(d) Delivery of the goods pursuant to a nonnegotiabledocument of title may be stopped by a seller under § 6A-2-705 or a lessorunder § 6A-2.1-526, subject to the requirements of due notification inthose sections. A bailee that honors the seller's or lessor's instructions isentitled to be indemnified by the seller or lessor against any resulting lossor expense.