2005 Illinois 810 ILCS 5/ Uniform Commercial Code. Part 5 - Warehouse Receipts And Bills Of Lading: Negotiation And Transfer
(810 ILCS 5/Art. 7 Pt. 5 heading)
PART 5.
WAREHOUSE RECEIPTS AND BILLS OF LADING: NEGOTIATION AND TRANSFER
(810 ILCS 5/7‑501) (from Ch. 26, par. 7‑501)
Sec. 7‑501.
Form
of negotiation and requirements of "due negotiation".
(1) 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.
(2) (a) A negotiable document of title is also negotiated by delivery
alone when by its original terms it runs to bearer;
(b) 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.
(3) 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.
(4) 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.
(5) Indorsement of a non‑negotiable document neither makes it negotiable
nor adds to the transferee's rights.
(6) 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.
(Source: Laws 1961, p. 2101.)
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(810 ILCS 5/7‑502) (from Ch. 26, par. 7‑502)
Sec. 7‑502.
Rights acquired by due negotiation.
(1) 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:
(a) title to the document;
(b) title to the goods;
(c) all rights accruing under the law of agency or estoppel,
including rights to goods delivered to the bailee after the document was
issued; and
(d) 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 Article.
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.
(2) 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.
(Source: Laws 1961, p. 2101.)
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(810 ILCS 5/7‑503) (from Ch. 26, par. 7‑503)
Sec. 7‑503.
Document of title to goods defeated in certain cases.
(1) 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
(a) delivered or entrusted them or any document of |
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title covering them to the bailor or his nominee with actual or apparent authority to ship, store, or sell with power to obtain delivery under this Article (Section 7‑‑403) or with power of disposition under this Act (Sections 2‑‑403 and 9‑320) or other statute or rule of law; nor
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(b) acquiesced in the procurement by the bailor or
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his nominee of any document of title.
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(2) 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 right of the
issuer or a transferee from the issuer.
(3) 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 Part 4 of this Article pursuant to its own bill of lading
discharges the carrier's obligation to deliver.
(Source: P.A. 91‑893, eff. 7‑1‑01.)
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(810 ILCS 5/7‑504) (from Ch. 26, par. 7‑504)
Sec. 7‑504.
Rights acquired in the absence of due negotiation; effect of diversion;
seller's stoppage of delivery.
(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 transferor 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.
(Source: Laws 1961, p. 2101.)
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(810 ILCS 5/7‑505) (from Ch. 26, par. 7‑505)
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.
(Source: Laws 1961, p. 2101.)
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(810 ILCS 5/7‑506) (from Ch. 26, par. 7‑506)
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.
(Source: Laws 1961, p. 2101.)
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(810 ILCS 5/7‑507) (from Ch. 26, par. 7‑507)
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
(a) that the document is genuine; and
(b) that he has no knowledge of any fact which would impair its
validity or worth; and
(c) that his negotiation or transfer is rightful and fully effective
with respect to the title to the document and the goods it represents.
(Source: Laws 1961, p. 2101.)
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(810 ILCS 5/7‑508) (from Ch. 26, par. 7‑508)
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.
(Source: Laws 1961, p. 2101.)
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(810 ILCS 5/7‑509) (from Ch. 26, par. 7‑509)
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
Articles on Sales (Article 2) and on Letters of Credit (Article 5).
(Source: Laws 1961, p. 2101.)
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