Why "a little misleadingly"? I do not know what is misleading.

      Documentary intangibles are things in action where the documents with which they are associated are so identified with the underlying obligation that transfer of the document effects a transfer of the obligation. For example, in what are called ‘documentary sales’ of goods, the sale goods will be in the physical possession of a carrier in transit to the buyer and consequently inaccessible to either the buyer or the seller. Documents called bills of lading are used, which are regarded as documents of title to the goods identified in them, so that typically the seller has an obligation to tender a bill of lading to the buyer rather than the goods, and the buyer must meet his payment obligation by tendering the purchase price against receipt of the documents. Thus, if it is transferable (known a little misleadingly as ‘negotiable’), a bill of lading can be bought and sold as if it were the goods themselves, since title to the document is recognized as title to the goods.8

8 In fact this is only a possessory title, since the bill only embodies a right to possess the goods.

Lee Roach, Commercial Law 2019 3 edn, page 23.

  • merriam-webster.com/dictionary/mislead Commented Dec 4, 2021 at 21:29
  • 1
    Look up "negotiate" in a dictionary. It has several meanings ("to bargain", "to navigate through", etc) and the one used here ("to transfer legally") is one of the least common in everyday speech. So readers might be misled into thinking one of the more common meanings is intended. This question is more about English than Law. Commented Dec 5, 2021 at 0:37

2 Answers 2


Because transferable is not the same as negotiable

Most property is transferable. That is the owner of the property can legally transfer ownership to someone else (by contract, deed, or gift).

This may require various degrees of formality: transfers of land must be in writing, transfers of motor vehicles usually require a change to a government register, transfers of a can of soft drink require no formality. Bills of landing serve to formalize the ownership of goods in transit and are so ubiquitous that the transfer of one is the transfer of the other. But that doesn’t make them negotiable.

For normal goods, a person cannot pass on better title then they themselves possess. So, if I steal something or acquire it by fraud or otherwise dishonesty, I don’t own it. If I sell it to you, you don’t own it either even though you are a possessor in good faith (I, as the thief am a possessor in bad faith). The actual owner can recover the goods from whoever possesses them even if that person legitimately acquired them.

Negotiable instruments are a special kind of transferable property where the mere possession of them (in good faith) makes you the owner of them. The most familiar type of negotiable property is cash. If I rob a bank and use that cash to legitimately buy something from you (and you don’t know the cash is stolen) then you own the cash. The original owner can go after me but they can’t come after you.

  • The holder in due course doctrine you allude to is one aspect of negotiability, but another one is that the transfer is effected by transfer and endorsement of the physical document itself, rather than, for example, a series of bills of sale or deeds that form a chain of title. In that respect it is negotiable.
    – ohwilleke
    Commented Dec 8, 2021 at 15:45

The passage here is not saying specifically that it's misleading to call bills of lading "negotiable" but rather that it is misleading to use the term "negotiable" to describe documents that may be used to "effect the transfer of an obligation." There are many other kinds of "negotiable instrument" to which this observation would also apply.

This is perceived to be misleading because there is not necessarily any negotiation involved, and "negotiable" would be used by most modern speakers of English to describe some element of a transaction that might be modified pursuant to a negotiation.


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