Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 6

U-States Forwarding Services Corp, issued bills of lading for goods from Shineworld Industrial Limited of Hong Kong. The goods were consigned "To order" without listing a name or person, but were to be shipped to Jacobs Turner, Ltd. In Scotland, which had agreed to pay $200,000 for them. Shineworld assigned the bills of lading to BII Finance Company Ltd as collateral for a loan. While the shipment was in transit, BII sent the bills of lading to Jacob's bank for payment. The bank found discrepancies in the documents and would not pay until Jacobs agreed. However, at Shineworld's direction, U-states released the goods to Jacobs without surrender of the bills of lading. U-states did not know that shineworld had assigned the bills of lading to BII. Shineworld had no assets, but BII recovered 65 percent from Jacobs. BII then sued U-states for the remainder. Is U-states liable for delivery of the goods without surrender of the bill of lading?