§ 28:7–507. Warranties on negotiation or delivery of document of title.

If a person negotiates or delivers a document of title for value, other than as a mere intermediary under § 28:7-508, unless otherwise agreed, the transferor, in addition to any warranty made in selling or leasing the goods, warrants to its immediate purchaser only that:

(1) The document is genuine;

(2) The transferor does not have knowledge of any fact that would impair the document’s validity or worth; and

(3) The negotiation or delivery is rightful and fully effective with respect to the title to the document and the goods it represents.

(Dec. 30, 1963, 77 Stat. 730, Pub. L. 88-243, § 1; Apr. 27, 2013, D.C. Law 19-299, § 9, 60 DCR 2634.)

Prior Codifications

1981 Ed., § 28:7-507.

1973 Ed., § 28:7-507.

Uniform Commercial Code Comment

Prior Uniform Statutory Provision: Section 36, Uniform Sales Act; Section 44, Uniform Warehouse Receipts Act; Section 35, Uniform Bills of Lading Act.

Changes: Consolidated and rewritten without change in policy.

Purposes of Changes: 1. This section omits provisions of the prior acts on warranties as to the goods as unnecessary and incomplete. It is unnecessary because such warranties derive from the contract of sale and not from the transfer of the documents. The fact that transfer of control occurs by way of a document of title does not limit or displace the ordinary obligations of a seller. The former provision, moreover, was incomplete because it did not expressly include all of the warranties which might rest upon a seller under such circumstances. This Act handles the problem by means of the precautionary reference to “any warranty made in selling the goods.“ If the transfer of documents attends or follows the making of a contract for the sale of goods, the general obligations on warranties as to the goods ( Sections 2-312 through 2-318) are brought to bear as well as the special warranties under this section.

2. The limited warranties of a delivering or collecting intermediary are stated in Section 7-508.

Cross References: Point 1: Sections 2-312 through 2-318.

Point 2: Section 7-508.

Definitional Cross References: “Document”. Section 7-102.

“Document of title”. Section 1-201.

“Genuine”. Section 1-201.

“Goods”. Section 7-102.

“Person”. Section 1-201.

“Purchaser”. Section 1-201.

“Value”. Section 1-201.

Prior Uniform Statutory Provision: Former Section 7-507.

Changes: Substitution of the word “delivery” for the word “transfer,” reference leasing transactions and style.

Purposes: 1. Delivery of goods by use of a document of title does not limit or displace the ordinary obligations of a seller or lessor as to any warranties regarding the goods that arises under other law. If the transfer of documents attends or follows the making of a contract for the sale or lease of goods, the general obligations on warranties as to the goods ( Sections 2-312 through 2-318 and Sections 2A-210 through 2A-316) are brought to bear as well as the special warranties under this section.

2. The limited warranties of a delivering or collecting intermediary, including a collecting bank, are stated in Section 7-508.

Cross References: Point 1: Sections 2-312 through 2-318 and 2A-310-through 2A-316.