Cargo Disputes: 
Lesson 3 - What are "Documents of Title"? 

When you ship goods on a vessel you normally get given a document to prove they've been shipped and are on the vessel. The most typical is a "bill of lading". There are others too, like delivery orders and seawaybills. These documents have different names because although broadly similar, they confer subtly (and sometimes significantly) different rights to the holder of the document.

These documents sometimes also perform more important functions than simply proving what was shipped: some of them can be termed "documents of title". This phrase is a term of art, and is subject to much caselaw.  

 

The importance of the term "document of title" is that certain rights inhere in the document itself and that document can be used to pass rights from one person (seller) to another (buyer) and sometimes onwards "down a string" to third parties. The main rights are:

 

(1) the ability to transfer title in the goods through the document to the buyer and sometimes a third party;

 

(2) constructive possession of the cargo (giving the right to demand delivery even if you don't yet own the goods); and

 

(3) the ability to transfer rights of suit against the carrier from buyer to seller (and sometimes third parties).   

 

These three rights are described by two concepts: "negotiability" and "transferability". Some documents of title are both negotiable and transferable. Some are only negotiable.  Confusingly, the words "negotiable" and "transferable" are often mixed up, as well, which doesn't help. 

Transferability and negotiability of "documents of title"

© 2020 by Francis Hornyold-Strickland.