Lloyd's Maritime and Commercial Law Quarterly
TRANSFERABLE AND NEGOTIABLE DOCUMENTS OF TITLE—A REDEFINITION?
A. M. Tettenborn*
It is difficult to make much sense of the law of international sales without dealing with the concepts of “negotiability” and “transferability” as applied to documents of title; unfortunately, there is as yet no universally-agreed definition of either. All of which makes highly significant a novel theory of what both terms mean, put forward in a recent book1 by Dr Charles Debattista. If true, this theory could have important implications; this article is intended to investigate it.
The theory
The orthodox view, insofar as there can be said to be one,2 runs thus. The concept of “transferability” depends on the wording of the document itself: a document is transferable if on its face it provides for the delivery of goods not simply to a named person, but rather to a holder for the time being, whether by endorsement or otherwise.3 The requirements of “negotiability”, by contrast, are more demanding: to be negotiable a document must (i) be transferable in the above sense;4 (ii) be able to represent the goods, so that delivery of the document is equivalent to physical delivery of the goods under, e.g., contracts of pledge;5 and (iii) oblige the carrier or other bailee to deliver only against presentation of the document.6 It follows, inter alia, that a document may be transferable without being negotiable, but not vice versa.7
* Fellow of Pembroke College, Cambridge.
1. Sale of Goods Carried by Sea (Butterworths, 1990) (hereafter “Debattista”).
2. See, e.g., Colinvaux (ed.), Carver’s Carriage by Sea, 13th edn. (1982) (hereafter “Carver”), paras. 1596 et seq.
3. See Mocatta et al. (eds.), Scrutton on Charterparties, 19h edn. (1984) (hereafter “Scrutton”), 185, Note 1 (in text); Guest et al., Benjamin’s Sale of Goods, 3rd edn. (1987) (hereafter “Benjamin”) para. 1438; Soproma S.p.A. v. Marine & Animal By-Products Corp. [1966] 1 Lloyd’s Rep. 367, 390. See too the careful and illuminating reasoning of Lord Neaves in the Scottish case of Connal v. Loder (1868) 6 M. 1095, 1102.
4. E.g., Carver, para. 568, n. 41; Scrutton, 185.
5. “The privilege of a negotiable document is, that when transferred it transfers in its own corpus the thing represented …”: supra, fn. 3, at p. 1102, per Lord Neaves. See too Thompson v. Dominy (1845) 14 M. & W. 403, 408, per Alderson, B.; Kum v. Wah Tat Bank
[1971] 1 Lloyd’s Rep. 439, 445, per curiam (per Lord Devlin); Robertson & Baxter v. Inglis (1897) 24 R. 758, 799, per Lord Pearson.
6. This is implicit in the decision in Kum v. Wah Tat Bank, supra, fn. 5; had the alleged document of title in that case not been marked “not negotiable”, the carrier there would have been liable for handing the goods it covered to a non-holder.
7. Connal v. Loder, supra, fn. 3, at p. 1102, per Lord Neaves. True, it is possible to find contrary suggestions. Benjamin, paras. 1438–1439, suggests that negotiability and transferability are synonymous, as does Lord Devlin in the Privy Council in Kum v. Wah Tat Bank, supra, fn. 5, at p. 446. But this cannot be true in a literal sense. A delivery warrant or warehouse receipt may purport to be transferable, but it still cannot be used to create a valid pledge: see Inglis v. Robertson [1898] A.C. 616, where the warrant was made out “to the order of [X] or assigns by endorsement hereon”.
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