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(1) A transferee of a document, whether negotiable or non-negotiable, to whom the document has been delivered but not duly negotiated, acquires the title and rights which his transferor had or had actual authority to convey.
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(2) In the case of a non-negotiable document, until but not after the bailee receives notification of the transfer, the rights of the transferee may be defeated
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(a) by those creditors of the transferor who could treat the sale as void under section 2–402; or
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(b) by a buyer from the transferor in ordinary course of business if the bailee has delivered the goods to the buyer or received notification of his rights; or
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(c) as against the bailee by good faith dealings of the bailee with the transferor.
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(3) A diversion or other change of shipping instructions by the consignor in a non-negotiable bill of lading which causes the bailee not to deliver to the consignee defeats the consignee’s title to the goods if they have been delivered to a buyer in ordinary course of business and in any event defeats the consignee’s rights against the bailee.
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(4) Delivery pursuant to a non-negotiable document may be stopped by a seller under section 2–705, and subject to the requirement of due notification there provided. A bailee honoring the seller’s instructions is entitled to be indemnified by the seller against any resulting loss or expense.