Alabama § 7-7-504 Rights Acquired in Absence of Due Negotiation; Effect of Diversion; Stoppage of Delivery

Alabama Statutes

§ 7-7-504 — Rights Acquired in Absence of Due Negotiation; Effect of Diversion; Stoppage of Delivery

Alabama § 7-7-504

Title 7Commercial Code

Art. 7Warehouse Receipts, Bills of Lading and Other Documents of Title

Part 5Warehouse Receipts and Bills of Lading: Negotiation and Transfer

This text of Alabama § 7-7-504 (Rights Acquired in Absence of Due Negotiation; Effect of Diversion; Stoppage of Delivery) is published on Counsel Stack Legal Research, covering Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ala. Code § 7-7-504 (2026).

Text

(a)A transferee of a document of title, whether negotiable or nonnegotiable, to which the document has been delivered but not duly negotiated, acquires the title and rights that its transferor had or had actual authority to convey.

(b)In the case of a transfer of a nonnegotiable document of title, until but not after the bailee receives notice of the transfer, the rights of the transferee may be defeated:

(1)By those creditors of the transferor which could treat the transfer as void under Section 7-2-402 or 7-2A-308;

(2)By a buyer from the transferor in ordinary course of business if the bailee has delivered the goods to the buyer or received notification of the buyer’s rights;

(3)By a lessee from the transferor in ordinary course of business if the bailee has delivered the goods to t

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(a) A transferee of a document of title, whether negotiable or nonnegotiable, to which the document has been delivered but not duly negotiated, acquires the title and rights that its transferor had or had actual authority to convey.
(b) In the case of a transfer of a nonnegotiable document of title, until but not after the bailee receives notice of the transfer, the rights of the transferee may be defeated:
(1) By those creditors of the transferor which could treat the transfer as void under Section 7-2-402 or 7-2A-308;
(2) By a buyer from the transferor in ordinary course of business if the bailee has delivered the goods to the buyer or received notification of the buyer’s rights;
(3) By a lessee from the transferor in ordinary course of business if the bailee has delivered the goods to the lessee or received notification of the lessee’s rights; or
(4) As against the bailee, by good faith dealings of the bailee with the transferor.
(c) A diversion or other change of shipping instructions by the consignor in a nonnegotiable bill of lading which causes the bailee not to deliver the goods to the consignee defeats the consignee’s title to the goods if the goods have been delivered to a buyer in ordinary course of business or a lessee in ordinary course of business and, in any event, defeats the consignee’s rights against the bailee.
(d) Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under Section 7-2-705 or a lessor under Section 7-2A-526, subject to the requirements of due notification in those sections. A bailee that honors the seller’s or lessor’s instructions is entitled to be indemnified by the seller or lessor against any resulting loss or expense.

Legislative History

(Prior version of this section added by Acts 1965, No. 549, p. 811; repealed by Act 2004-315, p. 464, §1; current section added by Act 2004-315, p. 464, §1.)