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Contract and Commercial Law Act 2017

Other commercial matters - Mercantile agents - Sales, pledges, and other dispositions by mercantile agents

306: Effect of transfer of document of title to goods on vendor’s lien and right of stopping goods in transit

You could also call this:

“How giving someone a document showing they own goods affects the seller's rights”

When someone buys goods or becomes their owner, they might get a document that proves they own those goods. This document is called a “document of title”. If the person who got this document (let’s call them person A) gives it to someone else who pays for it and doesn’t know about any problems with it, something important happens.

The new person who got the document from person A now has strong rights over the goods. These rights are so strong that they can beat two other rights: the seller’s right to keep the goods if they haven’t been paid (called a vendor’s lien), and the right to stop the goods while they’re being transported if they haven’t been paid for (called right of stopping goods in transit).

This transfer of the document has the same effect as if person A had given away a bill of lading, which is another kind of document used in shipping goods.

However, there’s one more thing to remember. This rule about transferring documents doesn’t always apply. You need to check section 186 of the law to see if there are any exceptions or extra rules that might change how this works.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844652.

Topics:
Business > Fair trading Business > Industry rules Money and consumer rights > Consumer protection
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305: Consignee’s lien, or

"Your right to keep goods until you're paid, even if the sender isn't the owner"

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307: Mode of transferring documents, or

"How to give a document to someone else"

Part 5 Other commercial matters
Mercantile agents: Sales, pledges, and other dispositions by mercantile agents

306Effect of transfer of document of title to goods on vendor’s lien and right of stopping goods in transit

  1. This section applies if—

  2. a document of title to goods has been lawfully transferred to a person (A) as a buyer or an owner of the goods; and
    1. A transfers the document to a person who takes the document in good faith and for valuable consideration.

      1. The transfer referred to in subsection (1)(b) has the same effect for defeating a vendor’s lien or right of stopping goods in transit as the transfer of a bill of lading has for defeating the right of stopping goods in transit.

      2. This section is subject to section 186.

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