Documents of Title

Documents of Title in the United States

Introduction to Documents Of Title (State statute topic)

“Documents of title” are items such as bills of lading and warehouse receipts that control the right to the goods described therein during commercial storage and shipment. When goods are imported, they are frequently paid for by means of a letter of credit (issued pursuant to Article 5 of the Uniform Commercial Code) calling for payment against specific documents of title. Thus, although documents of title may appear to be obscure instruments, they are in fact utilized on a daily basis by United States businesses and residents importing goods into the country.

Some US states did not recognize electronic documents of title, and therefore did not permit goods covered by electronic documents to be transferred or financed.

But revised legislation, following the Uniform Commercial Code amendments, recognizes electronic documents of title in those states, and establishes rules for the transfer of rights embodied therein from one person to another. Control of an electronic document of title
is the equivalent of possession and endorsement of a tangible document of title. The new state legislation permits the conversion of electronic documents to tangible documents and vice versa.

In addition, the legislation extends statute of frauds requirements to include electronic records
and signatures by creating new definitions of “record” and “sign”. The definitions recognize
information stored in electronic format and electronic symbols, respectively, as the term
“writing” is replaced with the term “record” wherever used in the Article.

The new legislation are consistent with the increasing recognition of electronic documents and instruments as equal in status to their paper counterparts under both state law and federal law.