Prior Uniform Statutory Provision: Former section 7-601.
Changes: To accommodate electronic documents; to provide flexibility to courts similar to the flexibility in section 3-309; to update to the modern era of deregulation; and for style.
1. Subsection (a) authorizes courts to order compulsory delivery of the goods or compulsory issuance of a substitute document. Compare section 7-402. Using language similar to that found in section 3-309, courts are given discretion as to what is adequate protection when the lost, stolen, or destroyed document was negotiable or whether security should be required when the lost, stolen, or destroyed document was nonnegotiable. In determining whether a party is adequately protected against loss in the case of a negotiable document, the court should consider the likelihood that the party will suffer a loss. The court is also given discretion as to the bailee's costs and attorney's fees. The rights and obligations of a bailee under this section depend upon whether the document of title is lost, stolen, or destroyed and is in addition to the ability of the bailee to bring an action for interpleader. See section 7-603.
2. Courts have the authority under this section to order a substitute document for either tangible or electronic documents. If the substitute document will be in a different medium than the original document, the court should fashion its order in light of the requirements of section 7-105.
3. Subsection (b) follows prior section 7-601 in recognizing the legality of the well established commercial practice of bailees making delivery in good faith when they are satisfied that the claimant is the person entitled under a missing (i.e. lost,
stolen, or destroyed) negotiable document. Acting without a court order, the bailee remains liable on the original negotiable
document and, to avoid conversion liability, the bailee may insist that the claimant provide an indemnity bond. Compare section 7-403.
4. Claimants on nonnegotiable instruments are permitted to avail themselves of the subsection (a) procedure because straight (nonnegotiable) bills of lading sometimes contain provisions that the goods shall not be delivered except upon production of the bill. If the carrier should choose to insist upon production of the bill, the consignee should have some means of compelling delivery on satisfactory proof of entitlement. Without a court order, a bailee may deliver, subject to section 7-403, to a person claiming goods under a nonnegotiable document that the same person claims is lost, stolen, or destroyed.
5. The bailee's lien should be protected when a court orders delivery of the goods pursuant to this section.
Point 1: Sections 3-309, 7-402, and 7-603.
Point 2: Section 7-105.
Point 3: Section 7-403.
Point 4: Section 7-403.
Point 5: Sections 7-209 and 7-307.
Definitional Cross References:
"Bailee". Section 7-102.
"Delivery". Section 1-201.
"Document of title". Section 1-201.
"Good faith". Sections 1-201 and 7-102.
"Goods". Section 7-102.
"Person". Section 1-201.