(a) Except as otherwise provided in Subsection (c) of this section, a document of title is negotiable if by its terms the goods are to be delivered to bearer or to the order of a named person.

(b) A document of title other than one described in Subsection (a) of this section is nonnegotiable. A bill of lading that states that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against an order in a record signed by the same or another named person.

(c) A document of title is nonnegotiable if, at the time it is issued, the document has a conspicuous legend, however expressed, that it is nonnegotiable.

History: 1953 Comp., § 50A-7-104, enacted by Laws 1961, ch. 96, § 7-104; 2005, ch. 144, § 54.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Prior Uniform Statutory Provision. — Former Section 7-104 [55-7-104 NMSA 1978].

Changes. — Subsection (a) is revised to reflect modern style and trade practice. Subsection (b) is revised for style and medium neutrality. Subsection (c) is new.

1. This Article deals with a class of commercial paper representing commodities in storage or transportation. This "commodity paper" is to be distinguished from what might be called "money paper" dealt with in the Article of this Act on Commercial Paper (Article 3) and "investment paper" dealt with in the Article of this Act on Investment Securities (Article 8). The class of "commodity paper" is designated "document of title" following the terminology of the Uniform Sales Act Section 76. Section 1-201 [55-1-201 NMSA 1978]. The distinctions between negotiable and nonnegotiable documents in this section makes the most important subclassification employed in the Article, in that the holder of negotiable documents may acquire more rights than its transferor had (See Section 7-502 [55-7-502 NMSA 1978]). The former Section 7-104 [55-7-104 NMSA 1978], which provided that a document of title was negotiable if it runs to a named person or assigns if such designation was recognized in overseas trade, has been deleted as not necessary in light of current commercial practice.

A document of title is negotiable only if it satisfies this section. "Deliverable on proper indorsement and surrender of this receipt" will not render a document negotiable. Bailees often include such provisions as a means of insuring return of nonnegotiable receipts for record purposes. Such language may be regarded as insistence by the bailee upon a particular kind of receipt in connection with delivery of the goods. Subsection (a) makes it clear that a document is not negotiable which provides for delivery to order or bearer only if written instructions to that effect are given by a named person. Either tangible or electronic documents of title may be negotiable if the document meets the requirement of this section.

2. Subsection (c) is derived from Section 3-104 (d) [55-3-104 NMSA 1978]. Prior to issuance of the document of title, an issuer may stamp or otherwise provide by a notation on the document that it is nonnegotiable even if the document would otherwise comply with the requirement of Subsection (a). Once issued as a negotiable document of title, the document cannot be changed from a negotiable document to a nonnegotiable document. A document of title that is nonnegotiable cannot be made negotiable by stamping or providing a notation that the document is negotiable. The only way to make a document of title negotiable is to comply with Subsection (a). A negotiable document of title may fail to be duly negotiated if the negotiation does not comply with the requirements for "due negotiation" stated in Section 7-501 [55-7-501 NMSA 1978].

Cross Reference. — Sections 7-501 [55-7-501 NMSA 1978] and 7-502 [55-7-502 NMSA 1978].

"Bearer". Section 1-201 [55-1-201 NMSA 1978].

"Bill of lading". Section 1-201.

"Delivery". Section 1-201.

"Document of title". Section 1-201.

"Person". Section 1-201.

"Sign". Section 7-102 [55-7-102 NMSA 1978].

"Warehouse receipt". Section 1-201.

Repeal and reenactments. — Laws 2005, ch. 144, § 54 repealed former 55-7-104 NMSA 1978, as enacted by Laws 1961, ch. 96, § 7-104, and enacted a new section, effective January 1, 2006.

Law reviews. — For article, "Essential Attributes of Commercial Paper - Part I," see 1 N.M. L. Rev. 479 (1971).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 11 Am. Jur. 2d Bills and Notes § 26 et seq.; 13 Am. Jur. 2d Carriers § 323 et seq.; 15A Am. Jur. 2d Commercial Code § 53; 68A Am. Jur. 2d Secured Transactions § 49; 78 Am. Jur. 2d Warehouses § 59.

Character of bill of lading contemplated by a guaranty of payment of a draft with bill of lading attached, 13 A.L.R. 166.

Provision in bill of lading prohibiting or limiting consignee's right to inspect goods shipped, 25 A.L.R. 770.

Jurisdiction of state courts in relation to interstate shipments, 64 A.L.R. 333.

Applicability of provision in receipt limiting liability, to conversion of property by warehouseman, 99 A.L.R. 266.

Stipulation in warehouseman's receipt fixing valuation of property as basis of responsibility, validity and applicability, 142 A.L.R. 776.

Necessity of bringing to bailor's attention provision in warehouse receipt limiting liability of warehouseman, 160 A.L.R. 1112.

Warehouseman's liability for loss occasioned by failure to issue proper receipt to depositor, 168 A.L.R. 945.

Construction and effect of U.C.C., art. 7, dealing with warehouse receipts, bills of lading and other documents of title, 21 A.L.R.3d 1339.

80 C.J.S. Shipping § 256 et seq.; 93 C.J.S. Warehousemen and Safe Depositaries § 25.