70A-7a-504 - Rights acquired in absence of due negotiation -- Effect of diversion -- Stoppage of delivery. - Utah Statutes

70A-7a-504. Rights acquired in absence of due negotiation -- Effect of diversion --Stoppage of delivery.
(1) A transferee of a document of title, whether negotiable or nonnegotiable, to which thedocument has been delivered but not duly negotiated, acquires the title and rights that itstransferor had or had actual authority to convey.
(2) In the case of a transfer of a nonnegotiable document of title, until but not after thebailee receives notice of the transfer, the rights of the transferee may be defeated:
(a) by those creditors of the transferor which could treat the transfer as void underSection 70A-2-402 or 70A-2a-308;
(b) by a buyer from the transferor in ordinary course of business if the bailee hasdelivered 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 hasdelivered 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.
(3) A diversion or other change of shipping instructions by the consignor in anonnegotiable bill of lading which causes the bailee not to deliver the goods to the consigneedefeats the consignee's title to the goods if the goods have been delivered to a buyer in ordinarycourse of business or a lessee in ordinary course of business and, in any event, defeats theconsignee's rights against the bailee.
(4) Delivery of the goods pursuant to a nonnegotiable document of title may be stoppedby a seller under Section 70A-2-705 or a lessor under Section 70A-2a-526, subject to therequirements of due notification in those sections. A bailee that honors the seller's or lessor'sinstructions is entitled to be indemnified by the seller or lessor against any resulting loss orexpense.

Enacted by Chapter 42, 2006 General Session