Section 7--504. Rights Acquired in Absence of Due Negotiation; Effect of\n Diversion; Stoppage of Delivery.\n (a) A transferee of a document of title, whether negotiable or\nnonnegotiable, to which the document has been delivered but not duly\nnegotiated, acquires the title and rights that its transferor had or had\nactual authority to convey.\n (b) In the case of a transfer of a nonnegotiable document of title,\nuntil but not after the bailee receives notice of the transfer, the\nrights of the transferee may be defeated:\n (1) by those creditors of the transferor which could treat the\ntransfer as void under Section 2--402 or 2-A--308;\n (2) by a buyer from the transferor in ordinary course of business if\nthe bailee has delivered the goods to the buyer or received notification\nof the buyer's rights;\n (3) by a lessee from the transferor in ordinary course of business if\nthe bailee has delivered the goods to the lessee or received\nnotification of the lessee's rights; or\n (4) as against the bailee, by good-faith dealings of the bailee with\nthe transferor.\n (c) A diversion or other change of shipping instructions by the\nconsignor in a nonnegotiable bill of lading which causes the bailee not\nto deliver the goods to the consignee defeats the consignee's title to\nthe goods if the goods have been delivered to a buyer in ordinary course\nof business or a lessee in ordinary course of business and, in any\nevent, defeats the consignee's rights against the bailee.\n (d) Delivery of the goods pursuant to a nonnegotiable document of\ntitle may be stopped by a seller under Section 2--705 or a lessor under\nSection 2-A--526, subject to the requirements of due notification in\nthose sections. A bailee that honors the seller's or lessor's\ninstructions is entitled to be indemnified by the seller or lessor\nagainst any resulting loss or expense.\n
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