Final answer:
Goods covered by a negotiable or non-negotiable document of title can be attached or levied upon as collateral, usually involving a court order, to secure a creditor's position in case of default. For negotiable titles, attachment can also occur when the document is surrendered.
Step-by-step explanation:
When it comes to a negotiable document of title, goods can be attached or levied upon by a creditor when the document is surrendered or a court order is obtained. This type of document signifies that the holder has the right to take possession of the goods and so it represents a form of collateral. For a non-negotiable document of title, attachment or levy usually requires a court order. With this type of document, the goods are more readily treated as collateral because its transfer does not necessarily assure the transfer of rights to the goods without the seller's consent.
In both cases, attachment or levy is subject to the rights of third parties and the due process of law. Lenders use goods and documents of title as collateral, aiming to secure their position and ensure repayment of loans. If the buyer defaults, the lender may seize and sell the collateral. This concept is akin to a copayment, where the buyer must fulfill an obligation—be that initial payment or satisfying a debt—before a third party like an insurer or lender assumes responsibility.