Lloyd's Maritime and Commercial Law Quarterly
Transfers of documents of title under English law and the Uniform Commercial Code
Sean Thomas *
This article considers the extent to which American law, represented by the Uniform Commercial Code, Art.7, protects innocent transferees of documents of title. Under English law, title conflicts involving documents of title are governed by the same provisions as those concerning goods. American law distinguishes title conflicts involving documents of title from those involving goods. This provides a clearer and more coherent system of law. It is submitted that, compared with English law, American law provides a suitable alternative system for commercial transactions involving documents of title.
I. INTRODUCTION
In English and American law, the law of sales is subject to the basic rule nemo dat quod non habet (you cannot give what you do not have), which finds statutory form in the Sale of Goods Act 1979 (“SGA”), s.21 and in the American Uniform Commercial Law (“UCC”), §2–403.1 Typical nemo dat conflicts (or title conflicts) involve disputes over the ownership of goods between two otherwise innocent parties, who suffer due to the actions of a third party. However, nemo dat conflicts also occur over documents of title. This article explores the English and American systems for dealing with nemo dat conflicts involving documents of title,2 in order to determine the extent of protection available for innocent transferees of documents of title in nemo dat conflicts.3 This article is restricted
* University of Leicester. I would like to thank Dr Ruth Wadman and the anonymous reviewers for their useful comments. In this article, references beginning with “§” generally refer to provisions of the Official Text of the UCC.
1. Closer examination of the UCC reveals variations of the basic rule expressed in different Articles: see eg §9–315, Official Comment 2; §9–201(a). Nevertheless, the locus classicus is that in §2–403.
2. English law and the UCC both provide statutory crystallisations of estoppel as a nemo dat exception: SGA, s.21(1); UCC, §2–403(1). For the sake of economy, estoppel will not be discussed in this article. On estoppel generally, see eg S Wilkins, Wilkins and Villiers on Estoppel, Waiver and Misrepresentation, 2nd edn (Oxford, 2002); J S Ewart, An Exposition of the Principles of Estoppel by Misrepresentation (Carswell, Toronto, 1900) (hereafter, “Ewart, Estoppel by Misrepresentation”). On the possible contradiction between estoppel and negotiability (as means of acquiring title to documents of title), see eg J S Ewart, “Negotiability and Estoppel” (1900) 16 LQR 135, 145–146; R E Negus, “The Negotiability of Bills of Lading” (1921) 37 LQR 442, 457–458.
3. This analysis of documents of title (be they bills of lading or other documents) is restricted to that necessary for the sake of comparison between the two systems. For further discussion of documents of title, see eg M D Bools, The Bill of Lading: A Document of Title to Goods: An Anglo-American Comparison (LLP, London, 1997) (hereafter “Bools, Bill of Lading”); C Debattista, Bills of Lading in Export Trade, 3rd edn (Tottel, Haywards Heath, 2009) (hereafter “Debattista, Bills of Lading”); N Gaskell, R Asariotis and Y Baatz, Bills of Lading: Law and Contracts (LLP, London, 2000) (hereafter “Gaskell, Bills of Lading”); R Aikens, R Lord and M Bools, Bills of Lading (Informa, London, 2006) (hereafter “Aikens, Bills of Lading”); Sir G Treitel and F M B Reynolds, Carver on Bills of Lading, 3rd edn (Sweet & Maxwell, London, 2011) (hereafter “Carver”); S Girvin, Carriage of Goods by Sea, 2nd edn (OUP, Oxford, 2011) (hereafter “Girven, Carriage”).
LLOYD’S MARITIME AND COMMERCIAL LAW QUARTERLY
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