2022 Kentucky Revised Statutes Chapter 355 - Uniform commercial code Article 355.7 - Warehouse Receipts, Bills of Lading, and Other Documents of Title 355.7-504 Rights acquired in the absence of due negotiation -- Effect of diversion -- Stoppage of delivery.
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355.7-504 Rights acquired in the absence of due negotiation -- Effect of diversion -Stoppage of delivery.
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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.
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:
(a) By those creditors of the transferor that could treat the transfer as void under
KRS 355.2-402 or 355.2A-308;
(b) By a buyer from the transferor in ordinary course of business if the bailee has
delivered the goods to the buyer or received notification of the buyer's rights;
(c) By a lessee from the transferor in ordinary course of business if the bailee has
delivered the goods to the lessee or received notification of the lessee's rights;
or
(d) As against the bailee, by good faith dealings of the bailee with the transferor.
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.
Delivery of the goods pursuant to a nonnegotiable document of title may be stopped
by a seller under KRS 355.2-705 or a lessor under KRS 355.2A-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.
Effective: July 12, 2012
History: Repealed and reenacted 2012 Ky. Acts ch. 132, sec. 33, effective July 12,
2012. -- Created 1958 Ky. Acts ch. 77, sec. 7-504, effective July 1, 1960.
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