SB480,30,97 (c) If the document's original terms run to the order of a named person and it
8is delivered to the named person, the effect is the same as if the document had been
9negotiated.
SB480,30,1110 (d) Negotiation of the document after it has been endorsed to a named person
11requires endorsement by the named person as well as delivery.
SB480,30,1612 (e) A document is duly negotiated if it is negotiated in the manner stated in this
13subsection to a holder that purchases it in good faith, without notice of any defense
14against or claim to it on the part of any person, and for value, unless it is established
15that the negotiation is not in the regular course of business or financing or involves
16receiving the document in settlement or payment of a monetary obligation.
SB480,30,17 17(2) The following rules apply to a negotiable electronic document of title:
SB480,30,2018 (a) If the document's original terms run to the order of a named person or to
19bearer, the document is negotiated by delivery of the document to another person.
20Endorsement by the named person is not required to negotiate the document.
SB480,30,2321 (b) If the document's original terms run to the order of a named person and the
22named person has control of the document, the effect is the same as if the document
23had been negotiated.
SB480,31,324 (c) A document is duly negotiated if it is negotiated in the manner stated in this
25subsection to a holder that purchases it in good faith, without notice of any defense

1against or claim to it on the part of any person, and for value, unless it is established
2that the negotiation is not in the regular course of business or financing or involves
3taking delivery of the document in settlement or payment of a monetary obligation.
SB480,31,5 4(3) Endorsement of a nonnegotiable document of title neither makes it
5negotiable nor adds to the transferee's rights.
SB480,31,8 6(4) The naming in a negotiable bill of lading of a person to be notified of the
7arrival of the goods does not limit the negotiability of the bill or constitute notice to
8a purchaser of the bill of any interest of that person in the goods.
SB480,31,11 9407.502 Rights acquired by due negotiation. (1) Subject to ss. 407.205
10and 407.503, a holder to which a negotiable document of title has been duly
11negotiated acquires thereby all of the following:
SB480,31,1212 (a) Title to the document.
SB480,31,1313 (b) Title to the goods.
SB480,31,1514 (c) All rights accruing under the law of agency or estoppel, including rights to
15goods delivered to the bailee after the document was issued.
SB480,31,2116 (d) The direct obligation of the issuer to hold or deliver the goods according to
17the terms of the document free of any defense or claim by the issuer except those
18arising under the terms of the document or under this chapter. In the case of a
19delivery order, the bailee's obligation accrues only upon the bailee's acceptance of the
20delivery order and the obligation acquired by the holder is that the issuer and any
21endorser will procure the acceptance of the bailee.
SB480,31,25 22(2) Subject to s. 407.503, title and rights acquired by due negotiation are not
23defeated by any stoppage of the goods represented by the document of title or by
24surrender of the goods by the bailee and are not impaired even if any of the following
25apply:
SB480,32,2
1(a) The due negotiation or any prior due negotiation constituted a breach of
2duty.
SB480,32,53 (b) Any person has been deprived of possession of a negotiable tangible
4document or control of a negotiable electronic document by misrepresentation, fraud,
5accident, mistake, duress, loss, theft, or conversion.
SB480,32,76 (c) A previous sale or other transfer of the goods or document has been made
7to a 3rd person.
SB480,32,11 8407.503 Document of title to goods defeated in certain cases. (1) A
9document of title confers no right in goods against a person that before issuance of
10the document had a legal interest or a perfected security interest in the goods and
11that did not do any of the following:
SB480,32,1612 (a) Deliver or entrust the goods or any document covering the goods to the bailor
13or the bailor's nominee with actual or apparent authority to ship, store, or sell; with
14power to obtain delivery under s. 407.403; or with power of disposition under s.
15402.403, 409.320, 409.321 (3), 411.304 (2), or 411.305 (2), or other statute or rule of
16law.
SB480,32,1717 (b) Acquiesce in the procurement by the bailor or its nominee of any document.
SB480,32,21 18(2) Title to goods based upon an unaccepted delivery order is subject to the
19rights of any person to which a negotiable warehouse receipt or bill of lading covering
20the goods has been duly negotiated. That title may be defeated under s. 407.504 to
21the same extent as the rights of the issuer or a transferee from the issuer.
SB480,32,25 22(3) Title to goods based upon a bill of lading issued to a freight forwarder is
23subject to the rights of any person to which a bill issued by the freight forwarder is
24duly negotiated. However, delivery by the carrier in accordance with subch. IV
25pursuant to its own bill of lading discharges the carrier's obligation to deliver.
SB480,33,5
1407.504 Rights acquired in absence of due negotiation; effect of
2diversion; stoppage of delivery.
(1) A transferee of a document of title, whether
3negotiable or nonnegotiable, to which the document has been delivered but not duly
4negotiated, acquires the title and rights that its transferor had or had actual
5authority to convey.
SB480,33,8 6(2) In the case of a nonnegotiable document of title, until but not after the bailee
7receives notice of the transfer, the rights of the transferee may be defeated by any of
8the following:
SB480,33,109 (a) Those creditors of the transferor that could treat the transfer as void under
10s. 402.402 or 411.308.
SB480,33,1211 (b) A buyer from the transferor in ordinary course of business if the bailee has
12delivered the goods to the buyer or received notification of the buyer's rights.
SB480,33,1413 (c) A lessee from the transferor in ordinary course of business if the bailee has
14delivered the goods to the lessee or received notification of the lessee's rights.
SB480,33,1515 (d) As against the bailee, by good faith dealings of the bailee with the transferor.
SB480,33,20 16(3) A diversion or other change of shipping instructions by the consignor in a
17nonnegotiable bill of lading which causes the bailee not to deliver the goods to the
18consignee defeats the consignee's title to the goods if the goods have been delivered
19to a buyer in ordinary course of business or a lessee in ordinary course of business
20and in any event defeats the consignee's rights against the bailee.
SB480,33,25 21(4) Delivery of the goods pursuant to a nonnegotiable document of title may be
22stopped by a seller under s. 402.705 or a lessor under s. 411.526, subject to the
23requirements of due notification in those sections. A bailee honoring the seller's or
24lessor's instructions is entitled to be indemnified by the seller or lessor against any
25resulting loss or expense.
SB480,34,3
1407.505 Endorser not guarantor for other parties. The endorsement of
2a tangible document of title issued by a bailee does not make the endorser liable for
3any default by the bailee or previous endorsers.
SB480,34,7 4407.506 Delivery without endorsement; right to compel endorsement.
5The transferee of a negotiable tangible document of title has a specifically
6enforceable right to have its transferor supply any necessary endorsement, but the
7transfer becomes a negotiation only as of the time the endorsement is supplied.
SB480,34,12 8407.507 Warranties on negotiation or delivery of document of title. If
9a person negotiates or delivers a document of title for value, otherwise than as a mere
10intermediary under s. 407.508, unless otherwise agreed, the transferor warrants to
11its immediate purchaser only in addition to any warranty made in selling or leasing
12the goods that all of the following apply:
SB480,34,13 13(1) The document is genuine.
SB480,34,15 14(2) The transferor does not have knowledge of any fact that would impair the
15document's validity or worth.
SB480,34,17 16(3) The negotiation or delivery is rightful and fully effective with respect to the
17title to the document and the goods it represents.
SB480,34,23 18407.508 Warranties of collecting bank as to documents of title. A
19collecting bank or other intermediary known to be entrusted with documents of title
20on behalf of another or with collection of a draft or other claim against delivery of
21documents warrants by the delivery of the documents only its own good faith and
22authority even if the collecting bank or other intermediary has purchased or made
23advances against the claim or draft to be collected.
SB480,35,3
1407.509 Adequate compliance with commercial contract. Whether a
2document of title is adequate to fulfill the obligations of a contract for sale, a contract
3for lease, or the conditions of a letter of credit is determined by ch. 402, 405, or 411.
SB480,35,44 Subchapter VI
SB480,35,65 warehouse receipts and bills of
6 lading: Miscellaneous provisions
SB480,35,16 7407.601 Lost, stolen, or destroyed documents of title. (1) If a document
8of title is lost, stolen, or destroyed, a court may order delivery of the goods or issuance
9of a substitute document and the bailee may without liability to any person comply
10with the order. If the document was negotiable, a court may not order delivery of the
11goods or issuance of a substitute document without the claimant's posting security
12unless it finds that any person that may suffer loss as a result of nonsurrender of
13possession or control of the document is adequately protected against the loss. If the
14document was nonnegotiable, the court may require security. The court may also
15order payment of the bailee's reasonable costs and attorney fees in any action under
16this subsection.
SB480,35,22 17(2) A bailee that without court order delivers goods to a person claiming under
18a missing negotiable document of title is liable to any person injured thereby. If the
19delivery is not in good faith, the bailee is liable for conversion. Delivery in good faith
20is not conversion if the claimant posts security with the bailee in an amount at least
21double the value of the goods at the time of posting to indemnify any person injured
22by the delivery which files a notice of claim within one year after the delivery.
SB480,36,7 23407.602 Attachment of goods covered by negotiable document of title.
24Unless a document of title was originally issued upon delivery of the goods by a
25person that did not have power to dispose of them, a lien does not attach by virtue

1of any judicial process to goods in the possession of a bailee for which a negotiable
2document of title is outstanding unless possession or control of the document is first
3surrendered to the bailee or the document's negotiation is enjoined. The bailee may
4not be compelled to deliver the goods pursuant to process until possession or control
5of the document is surrendered to the bailee or to the court. A purchaser of the
6document for value without notice of the process or injunction takes free of the lien
7imposed by judicial process.
SB480,36,12 8407.603 Conflicting claims; interpleader. If more than one person claims
9title to or possession of the goods, the bailee is excused from delivery until the bailee
10has a reasonable time to ascertain the validity of the adverse claims or to commence
11an action for interpleader. The bailee may assert an interpleader either in defending
12an action for nondelivery of the goods or by original action.
SB480, s. 23 13Section 23. 408.103 (7) of the statutes is created to read:
SB480,36,1514 408.103 (7) A document of title, as defined in s. 401.201 (15), is not a financial
15asset unless s. 408.102 (1) (i) 1. c. applies.
SB480, s. 24 16Section 24. 409.102 (2) (df) of the statutes is created to read:
SB480,36,1717 409.102 (2) (df) "Control" (with respect to a document of title) — s. 407.106.
SB480, s. 25 18Section 25. 409.203 (2) (c) 4. of the statutes is amended to read:
SB480,36,2219 409.203 (2) (c) 4. The collateral is deposit accounts, electronic chattel paper,
20investment property, or letter-of-credit rights, or electronic documents, and the
21secured party has control under s. 407.106, 409.104, 409.105, 409.106, or 409.107
22pursuant to the debtor's security agreement.
SB480, s. 26 23Section 26. 409.207 (3) (intro.) of the statutes is amended to read:
SB480,37,224 409.207 (3) Duties and rights when secured party in possession or control.
25(intro.) Except as otherwise provided in sub. (4), a secured party having possession

1of collateral or control of collateral under s. 407.106, 409.104, 409.105, 409.106, or
2409.107:
SB480, s. 27 3Section 27. 409.208 (2) (d) of the statutes is amended to read:
SB480,37,94 409.208 (2) (d) A secured party having control of investment property under
5s. 408.106 (4) (b) or 409.106 (2) shall send to the securities intermediary or
6commodity intermediary with which the security entitlement or commodity contract
7is maintained an authenticated record that releases the securities intermediary or
8commodity intermediary from any further obligation to comply with entitlement
9orders or directions originated by the secured party; and
SB480, s. 28 10Section 28. 409.208 (2) (e) of the statutes is amended to read:
SB480,37,1511 409.208 (2) (e) A secured party having control of a letter-of-credit right under
12s. 409.107 shall send to each person having an unfulfilled obligation to pay or deliver
13proceeds of the letter of credit to the secured party an authenticated release from any
14further obligation to pay or deliver proceeds of the letter of credit to the secured
15party.; and
SB480, s. 29 16Section 29. 409.208 (2) (f) of the statutes is created to read:
SB480,37,1817 409.208 (2) (f) A secured party having control of an electronic document shall
18do all of the following:
SB480,37,2019 1. Give control of the electronic document to the debtor or its designated
20custodian.
SB480,38,221 2. If the debtor designates a custodian that is the designated custodian with
22which the authoritative copy of the electronic document is maintained for the
23secured party, communicate to the custodian an authenticated record releasing the
24designated custodian from any further obligation to comply with instructions

1originated by the secured party and instructing the custodian to comply with
2instructions originated by the debtor.
SB480,38,53 3. Take appropriate action to enable the debtor or its designated custodian to
4make copies of or revisions to the authoritative copy which add or change an
5identified assignee of the authoritative copy without the consent of the secured party.
SB480, s. 30 6Section 30. 409.301 (3) (intro.) of the statutes is amended to read:
SB480,38,97 409.301 (3) Location of property. (intro.) Except as otherwise provided in sub.
8(4), while tangible negotiable documents, goods, instruments, money, or tangible
9chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:
SB480, s. 31 10Section 31. 409.310 (2) (e) of the statutes is amended to read:
SB480,38,1311 409.310 (2) (e) In certificated securities, documents, goods, or instruments
12which is perfected without filing, control, or possession under s. 409.312 (5), (6), or
13(7);
SB480, s. 32 14Section 32. 409.310 (2) (h) of the statutes is amended to read:
SB480,38,1715 409.310 (2) (h) In deposit accounts, electronic chattel paper, electronic
16documents,
investment property, or letter-of-credit rights which is perfected by
17control under s. 409.314;
SB480, s. 33 18Section 33. 409.312 (5) of the statutes is amended to read:
SB480,38,2319 409.312 (5) Temporary perfection: new value. A security interest in
20certificated securities, negotiable documents, or instruments is perfected without
21filing or the taking of possession or control for a period of 20 days from the time it
22attaches to the extent that it arises for new value given under an authenticated
23security agreement.
SB480, s. 34 24Section 34. 409.313 (1) of the statutes is amended to read:
SB480,39,6
1409.313 (1) Perfection by possession or delivery. Except as otherwise
2provided in sub. (2), a secured party may perfect a security interest in tangible
3negotiable documents, goods, instruments, money, or tangible chattel paper by
4taking possession of the collateral. A secured party may perfect a security interest
5in certificated securities by taking delivery of the certificated securities under s.
6408.301.
SB480, s. 35 7Section 35. 409.314 (1) of the statutes is amended to read:
SB480,39,118 409.314 (1) Perfection by control. A security interest in investment property,
9deposit accounts, letter-of-credit rights, or electronic chattel paper, or electronic
10documents
may be perfected by control of the collateral under s. 407.106, 409.104,
11409.105, 409.106, or 409.107.
SB480, s. 36 12Section 36. 409.314 (2) of the statutes is amended to read:
SB480,39,1813 409.314 (2) Specified collateral: time of perfection by control;
14continuation of perfection.
A security interest in deposit accounts, electronic
15chattel paper, or letter-of-credit rights, or electronic documents is perfected by
16control under s. 407.106, 409.104, 409.105, or 409.107 when the secured party
17obtains control and remains perfected by control only while the secured party retains
18control.
SB480, s. 37 19Section 37. 409.317 (2) of the statutes is amended to read:
SB480,39,2520 409.317 (2) Buyers that receive delivery. Except as otherwise provided in
21sub. (5), a buyer, other than a secured party, of tangible chattel paper, tangible
22documents, goods, instruments, or a security certificate takes free of a security
23interest or agricultural lien if the buyer gives value and receives delivery of the
24collateral without knowledge of the security interest or agricultural lien and before
25it is perfected.
SB480, s. 38
1Section 38. 409.317 (4) of the statutes is amended to read:
SB480,40,72 409.317 (4) Licensees and buyers of certain collateral. A licensee of a
3general intangible or a buyer, other than a secured party, of accounts, electronic
4chattel paper, electronic documents, general intangibles, or investment property
5other than a certificated security takes free of a security interest if the licensee or
6buyer gives value without knowledge of the security interest and before it is
7perfected.
SB480, s. 39 8Section 39. 409.338 (2) of the statutes is amended to read:
SB480,40,139 409.338 (2) A purchaser, other than a secured party, of the collateral takes free
10of the security interest or agricultural lien to the extent that, in reasonable reliance
11upon the incorrect information, the purchaser gives value and, in the case of tangible
12chattel paper, tangible documents, goods, instruments, or a security certificate,
13receives delivery of the collateral.
SB480, s. 40 14Section 40. 409.601 (2) of the statutes is amended to read:
SB480,40,1815 409.601 (2) Rights and duties of secured party in possession or control. A
16secured party in possession of collateral or control of collateral under s. 407.106,
17409.104, 409.105, 409.106, or 409.107 has the rights and duties provided in s.
18409.207.
SB480, s. 41 19Section 41. 411.103 (1) (a) of the statutes is amended to read:
SB480,41,220 411.103 (1) (a) "Buyer in ordinary course of business" means a person who, in
21good faith and without knowledge that the sale to him or her is in violation of the
22ownership rights or security interest or leasehold interest of a 3rd party in the goods,
23buys in ordinary course from a person in the business of selling goods of that kind
24but does not include a pawnbroker. "Buying" may be for cash or by exchange of other
25property or on secured or unsecured credit and includes receiving acquiring goods or

1documents of title under a preexisting contract for sale but does not include a
2transfer in bulk or as security for or in total or partial satisfaction of a money debt.
SB480, s. 42 3Section 42. 411.103 (1) (o) of the statutes is amended to read:
SB480,41,124 411.103 (1) (o) "Lessee in ordinary course of business" means a person who in
5good faith and without knowledge that the lease to him or her is in violation of the
6ownership rights or security interest or leasehold interest of a 3rd party in the goods
7leases in ordinary course from a person in the business of selling or leasing goods of
8that kind but does not include a pawnbroker. "Leasing" may be for cash or by
9exchange of other property or on secured or unsecured credit and includes receiving
10acquiring goods or documents of title under a preexisting lease contract but does not
11include a transfer in bulk or as security for or in total or partial satisfaction of a
12money debt.
SB480, s. 43 13Section 43. 411.514 (2) of the statutes is amended to read:
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