ORS 77.5040¹
Rights acquired in the absence of due negotiation
  • effect of diversion
  • stoppage of delivery

(1) 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 the document’s transferor had or had actual authority to convey.

(2) 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:

(a) By those creditors of the transferor which could treat the transfer as void under ORS 72.4020 (Rights of seller’s creditors against sold goods) or 72A.3080 (Special rights of creditors);

(b) 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;

(c) 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

(d) As against the bailee by good faith dealings of the bailee with the transferor.

(3) 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 lessee in ordinary course of business and, in any event, defeats the consignee’s rights against the bailee.

(4) Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under ORS 72.7050 (Seller’s stoppage of delivery in transit or otherwise) or a lessor under ORS 72A.5260 (Lessor’s stoppage of delivery in transit or otherwise) 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. [1961 c.726 §77.5040 (Rights acquired in the absence of due negotiation); 2009 c.181 §80]

1 Legislative Counsel Committee, CHAPTER 77—Warehouse Receipts, Bills of Lading and Other Documents of Title, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors077.­html (2019) (last ac­cessed May 16, 2020).
 
2 OregonLaws.org contains the con­tents of Volume 21 of the ORS, inserted along­side the per­tin­ent statutes. See the preface to the ORS An­no­ta­tions for more information.
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent. Currency Information