Prior Uniform Statutory Provision: Former section 7-403.
Changes: Definition in former section 7-403(4) moved to section 7-102; bracketed language in former section 7-403(1)(b) deleted; added cross reference to section 2A-526; changes for style.
1. The present section, following former section 7-403, is constructed on the basis of stating what previous deliveries or
other circumstances operate to excuse the bailee's normal obligation on the document. Accordingly, "justified" deliveries under the precode uniform acts now find their place as "excuse" under subsection (a).
2. The principal case covered by subsection (a)(1) is delivery to a person whose title is paramount to the rights represented by the document. For example, if a thief deposits stolen goods in a warehouse facility and takes a negotiable receipt, the warehouse is not liable on the receipt if it has surrendered the goods to the true owner, even though the receipt is held by a good faith purchaser. See section 7-503(a). However, if the owner entrusted the goods to a person with power of disposition, and that person deposited the goods and took a negotiable document, the owner receiving delivery would not be rightful as against a holder to whom the negotiable document was duly negotiated, and delivery to the owner would not give the bailee a defense against such a holder. See sections 7-502(a)(2) and 7-503(a)(1).
3. Subsection (a)(2) amounts to a cross reference to all the tort law that determines the varying responsibilities and standards of care applicable to commercial bailees. A restatement of this tort law would be beyond the scope of this code. Much of the applicable law as to responsibility of bailees for the preservation of the goods and limitation of liability in case of loss has been codified for particular classes of bailees in interstate and foreign commerce by federal legislation and treaty and for
intrastate carriers and other bailees by the regulatory state laws preserved by section 7-103. In the absence of governing
legislation the common law will prevail subject to the minimum standard of reasonable care prescribed by sections 7-204 and 7-309 of this article.
The bracketed language found in former section 7-403(1)(b) has been deleted thereby leaving the allocations of the burden of going forward with the evidence and the burden of proof to the procedural law of the various states.
Subsection (a)(4) contains a cross reference to both the seller's and the lessor's rights to stop delivery under article 2 and article 2A respectively.
4. As under former section 7-403, there is no requirement that a request for delivery must be accompanied by a formal tender of the amount of the charges due. Rather, the bailee must request payment of the amount of its lien when asked to deliver, and only in case this request is refused is it justified in declining to deliver because of nonpayment of charges. Where delivery without payment is forbidden by law, the request is treated as implicit. Such a prohibition reflects a policy of uniformity to prevent discrimination by failure to request payment in particular cases. Subsection (b) must be read in conjunction with the priorities given to the warehouse lien and the carrier lien under sections 7-209 and 7-307, respectively. If the parties are in dispute about whether the request for payment of the lien is legally proper, the bailee may have recourse to interpleader. See section 7-603.
5. Subsection (c) states the obvious duty of a bailee to take up a negotiable document or note partial deliveries conspicuously thereon, and the result of failure in that duty. It is subject to only one exception, that stated in subsection (a)(1) of this section and in section 7-503(a). Subsection (c) is limited to cases of delivery to a claimant; it has no application, for example, where goods held under a negotiable document are lawfully sold to enforce the bailee's lien.
6. When courts are considering subsection (a)(7), "any other lawful excuse", among others, refers to compliance with court orders under sections 7-601, 7-602, and 7-603.
Point 2: Sections 7-502 and 7-503.
Point 3: Sections 2-705, 2A-526, 7-103, 7-204, 7-309, and 10-103.
Point 4: Sections 7-209, 7-307, and 7-603.
Point 5: Section 7-503(1).
Point 6: Sections 7-601, 7-602, and 7-603.
Definitional Cross References:
"Bailee". Section 7-102.
"Conspicuous". Section 1-201.
"Delivery". Section 1-201.
"Document of title". Section 1-201.
"Duly negotiate". Section 7-501.
"Goods". Section 7-102.
"Lessor". Section 2A-103.
"Person". Section 1-201.
"Receipt of goods". Section 2-103.
"Right". Section 1-201.
"Terms". Section 1-201.
"Warehouse". Section 7-102.