§ 7503. Document of title to goods defeated in certain cases.

(a) General rule.--A document of title confers no right in goods against a person that before issuance of the document had a legal interest or a perfected security interest in the goods and that did not:

(1) deliver or entrust the goods or any document of title covering the goods to the bailor or the bailor's nominee with actual or apparent authority to ship, store or sell; with power to obtain delivery under section 7403

(relating to obligation of bailee to deliver; excuse); or with power of disposition under section 2403 (relating to power to transfer; good faith purchase of goods; "entrusting"), 2A304(a)(2) (relating to subsequent lease of goods by lessor), 2A305(a)(2) (relating to sale or sublease of goods by lessee), 9320 (relating to buyer of goods), 9321(c) (relating to licensee of general intangible and lessee of goods in ordinary course of business) or other statute or rule of law; or

(2) acquiesce in the procurement by the bailor or its nominee of any document.

(b) Negotiable warehouse receipt or bill of lading.--Title to goods based upon an unaccepted delivery order is subject to the rights of any person to which a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. That title may be defeated under section 7504 (relating to rights acquired in absence of due negotiation; effect of diversion; stoppage of delivery) to the same extent as the rights of the issuer or a transferee from the issuer.

(c) Freight forwarder.--Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of any person to which a bill issued by the freight forwarder is duly negotiated. However, delivery by the carrier in accordance with Chapter 74 (relating to warehouse receipts and bills of lading: general obligations) pursuant to its own bill of lading discharges the carrier's obligation to deliver.

Cross References. Section 7503 is referred to in sections 7403, 7502 of this title.