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General Laws

[ Text of section effective until July 1, 2013. For text effective July 1, 2013, see below.]

  Section 7-504. (1) 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.

  (2) 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.

  (a) by those creditors of the transferor who could treat the sale as void under section 2-402; or

  (b) by a buyer from the transfer or in ordinary course of business if the bailee has delivered the goods to the buyer or received notification of his rights; or

  (c) as against the bailee by good faith dealings of the bailee with the transferor.

  (3) A diversion or other change of shipping instructions by the consignor in a 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.

  (4) 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.

Chapter 106: Section 7-504. Rights Acquired In Absence Of Due Negotiation; Effect Of Diversion; Stoppage Of Delivery

[ Text of section as recodified by 2013, 30, Sec. 45 effective July 1, 2013 applicable as provided by 2013, 30, Sec. 116. For text effective until July 1, 2013, see above.]

  Section 7-504. (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 transfer of a nonnegotiable document of title, until but not after the bailee receives notice of the transfer, the rights of the transferee may be defeated:

  (1) by those creditors of the transferor which 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 that honors the seller's or lessor's instructions is entitled to be indemnified by the seller or lessor against any resulting loss or expense.

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