Commentary on sections of the Act Section 1: Definition of "paper trade document"
Section 1(1) defines the types of trade documents which may fall within the scope of the Act. It does this by setting out three criteria that a document must satisfy in order to qualify as a "paper trade document" for the purposes of the Act.
	Section 1(1)(a) requires the document to be in paper form. This is because the Act is concerned with electronic forms of trade documents that are currently used in paper form.
	Section 1(1)(b) requires the document to be of a type commonly used in connection with trade in or transport of goods, or financing such trade or transport of goods. The purpose of this section is to narrow the ambit of the documents that fall within the scope of the Act. Its purpose is to exclude documents not of a type commonly used in connection with trade in or transport of goods (or financing thereof) but which may otherwise fall within the scope of the Act because they satisfy the remaining requirements in section 1. To provide certainty and clarity, and to prevent potential arguments that a broader range of documents fall within the scope of the Act (such as stock transfer forms, provisional allotment letters and other documents routinely used in financial or money markets) the Act is limited to documents of a type commonly used in connection with trade. In addition, the document need only be commonly used in trade in at least one part of the United Kingdom to satisfy section 1(1)(b). This wording prevents the situation from arising whereby a document is of a type commonly used in trade in England and Wales, for example, but not in Scotland (and would otherwise fall outside the scope of the Act).
	Section 1(1)(c) provides that possession of the document must be required for a person to claim performance of an obligation. Possession may be required as a matter of law, commercial custom, usage or practice. This section is an "umbrella" provision, and allows for a broad range of documents to fall within the scope of the Act. The intention behind this section is to ensure that (subject to the remaining sections of the Act) any document the functionality of which requires it to be possessed falls within the scope of the Act, regardless of its precise legal or commercial nature.
	For example, warehouse receipts and ship's delivery orders are not documents of title at common law, but possession is generally an important part of how these documents operate in practice. Possession of these documents may be required in certain circumstances as a matter of practice for a person to claim performance of an obligation, or for certain effects to follow under statute (for example, the Sale of Goods Act 1979). Whether possession is required for the operation of such documents depends on the manner in which they are made out, and the context in which they are used. When possession is relevant as a matter of practice for a person to claim performance of an obligation, these documents fall within the scope of section 1(1)(c). The umbrella provision also ensures flexibility insofar as certain documents may not fall within its scope today, but could do so if a commercial custom or practice were to develop requiring possession of those documents in order for them to fulfil their legal and commercial functions. For example, although consignment notes are already used in electronic form and so are not generally required to be possessed, they would be covered by the umbrella provision if there were circumstances in practice where they were required to be possessed in order for a person to claim performance of an obligation.
	Section 1(2) sets out a non-exhaustive list of documents that are commonly used in connection with trade in or transport of goods, or financing such trade or transport. The documents listed in section 1(2) are key trade documents in widespread use, and have therefore been specifically listed for the sake of certainty and clarity. A particular document on the list will only be caught by the Act if it nevertheless satisfies the remaining requirements in section 1(1).
	For example, the term "bill of lading" is broad and encompasses various types of document, including, for example, "shipped" or "on-board" bills of lading, "straight" bills of lading (usually marked as "non-negotiable") and multimodal bills of lading (which can classify as "received for shipment" bills of lading). The reference to "a bill of lading" in section 1(2)(c) of the Act is intended to cover all of these types of bill of lading, meaning that such documents are commonly used in connection with trade for the purposes of section 1(2)(b), and will therefore fall within the scope of the Act, provided possession is a necessary aspect of their functionality.