DOCUMENT OF TITLE
Any written instrument, such as a bill of lading, a
warehouse receipt, or an order for the delivery of
goods, that in the usual course of business or financ-
ing is considered sufficient proof that the person
who possesses it is entitled to receive, hold, and dis-
pose of the instrument and the goods that it covers.
A document of title is usually either issued
or addressed by a bailee—an individual who has
custody of the goods of another—to a bailor—
the person who has entrusted the goods to him
or her. Its terms must describe the goods cov-
ered by it so that they are identifiable as well as
set forth the conditions of the contractual agree-
ment. Possession of a document of title is sym-
bolic of ownership of the goods that are
described within it.
Documents of title are an integral part of the
business world since they facilitate commercial
transactions by serving as security for loans
sought by their possessors and by promoting the
free flow of goods without unduly burdening
the channels of commerce.
A person who possesses a document of title
can legally transfer ownership of the goods cov-
ered by it by delivering or endorsing it over to
another without physically moving the goods. In
such a situation, a document of title is a nego-
tiable instrument because it transfers legal rights
of ownership from one person to another
merely by its delivery or endorsement. It is nego-
tiable only if its terms state that the goods are to
be delivered to the bearer, the holder of the doc-
ument, to the order of the named party, or,
where recognized in overseas trade, to a named
person or his or her assigns. The UNIFORM COM-
MERCIAL CODE and various federal and state
regulatory laws define the legal rights and obli-
