Passage of Title Using Documents of Title Discussion

Passage of Title Using Documents of TitleA document of title is a means whereby the parties can facilitate the transfer of title tothe goods without actually moving them or provide a means for a creditor to take aninterest in the goods. The use of a document of title also provides a simple answer tothe question of when title to the goods passes from seller to buyer in a sales transaction.Title to the goods passes when the document of title is transferred from the seller to thebuyer.7C P A Documents of title are governed under Article 7 of the UCC, the final section of theUCC to undergo major revisions in the last decade of the twentieth century. The purposeof the 2003 revisions to Article 7 was to address the issues that have arisen because ofelectronic filing of documents of title. The Article 7 revisions have been adopted in 48states.8Article 7 now addresses the commercial reality of electronic tracking and the use ofelectronic records as documents of title. Under Article 7, the definition of a document oftitle now includes electronic documents of title.The discussion of documents of title here is limited to commercial transactions, transport,and storage. Many forms of documents of title are not covered under Article 7. Forexample, all states have some form of title system required for the transfer of title tomotor vehicles.9 Those systems govern title passage for automobiles. The two primaryforms of documents of title under Article 7 used to pass title to goods are bills of lading(issued by a carrier) and warehouse receipts.10 Details on these documents and the rightsof the parties are found in Chapter 21.

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