Documents of title to the goods in international sale transactions
Documents of title utilized in international sale transactions are of two kinds. One type of documents gives title to the goods indicated in them. The other type of documents serves as a receipt showing that particular goods have been placed in a warehouse. The bill of lading whether it bears the title of a marine bill of lading or a combined transport bill of lading, is an internationally recognized document of title to the goods. However, warehouse receipts issued by certain bodies are conferred a similar status of document of title. A dock warrant or a warehouse keeper's warrant is a document issued by an authorized warehouse keeper. It serves two functions; it is a contract of storage, and a document of title.
Endorsements and delivery of the document is sufficient to pass title to the goods. On the other hand, non-transferable warehouse keeper's receipts or certificates are documents which merely show the location where the goods have been lodged. The word non-negotiable or non-transferable appears on the face of a warehouse keeper's certificate. Likewise, delivery orders are not deemed documents of title to the goods. Accordingly, if the banker releases a bill of lading to the order of the account party for the purpose of warehousing the goods, he should ask the latter to furnish him in lieu of the bill of lading of a warehouse keeper's warrant indicating that the goods are deliverable either to the banker or to his assigns by endorsement.
The distinction between a document of title to the goods, and other documents not representing title to the goods, is of crucial importance to the banker's security against the account party's insolvency. Possession of a delivery order or a non-transferable warehouse keeper's certificate is of no avail to the banker against the claim of the trustee in bankruptcy. On the other hand, the banker's security interest is perfected by his possession of the title to the goods.
In sum, the kind of document a banker is interested to obtain as security against advances, is the type of document utilized in the ordinary course of business as evidencing possession or that control of the goods or authorizing that possession of the goods shall be effected by endorsement or by delivery of such document.