Comprehensive Volume, 18th Edition

Chapter 24: Legal Aspects of

Supply Chain Management

ChapterChapter

2424

Warehousers

A warehouser stores the goods of others for compensation and has the rights and duties of a bailee in an ordinary mutual benefit bailment.

A warehouser issues a warehouse receipt to the depositor of the goods.

This receipt is a document of title that ordinarily entitles the person in possession of the receipt to receive the goods.

ChapterChapter

2424

Warehouse Receipts

Nonnegotiable Negotiable

To whom goods are deliveredas stated on receipt

Deliver to Jane Doe Deliver to the beareror

Deliver to the order of JohnDoe

Purposes of receipt 1. Contract for storage2. Receipt for goods3. Document of title

1. Contract for storage2. Receipt for goods3. Document of title

Is receipt required for deliveryof goods?

Yes YesIf receipt says “Deliver to theorder of John Doe,” It must beindorsed by John Doe forholder of receipt to receivegoods.

ChapterChapter

2424

Negotiability of Receipts

In some cases, a warehouse receipt can be bought, sold, or used as security to obtain a loan.

A nonnegotiable warehouse receipt states that the goods received will be delivered to a specified person.

A negotiable warehouse receipt states that the goods will be delivered “to the bearer” or “to the order of” a named person.

ChapterChapter

2424

Due Negotiation of Receipt

WAREHOUSER(Issuer)(Bailee)

WAREHOUSERECEIPT

BUYER

PURCHASER OF WAREHOUSE

RECEIPT

WAREHOUSERECEIPT

Indorsement anddelivery

value/good faithdue negotiation

right to goods

or right tonegotiate further

GOODSSELLER

(Depositor) (Bailee)

ChapterChapter

2424

Limitation of Liability

A warehouser may limit its liability for loss or damage to goods due to its own negligence to an agreed valuation of the property stated in the receipt.

The depositor must be given the right to store the goods without the limitation at a higher storage rate.

ChapterChapter

2424

Types of Carriers

Common CarriersFurnish transportation of goods for a price; available to the general public.

Contract CarriersFurnish transportation of goods according to a specific contract with a specific party.

Private CarriersTransport goods owned by the carrier’s owners.

ChapterChapter

2424

Common Carrier of GoodsA common carrier of goods transports goods received from the general public, and issues a bill of lading or an airbill.

These are documents of title and provide rights similar to a warehouse receipt.

A common carrier is absolutely liable for loss or damage to the goods unless the loss was caused solely by an act of God, an act of a public enemy, an act of a public authority, an act of the shipper, or the inherent nature of the goods.

ChapterChapter

2424

Factors (Consignment)

A factor is a special type of bailee who has possession of someone else’s property for the purpose of selling it.

This arrangement is commonly called selling on consignment, and the owner is called a consignor.

The factor, or consignee, receives a commission on the sale.

ChapterChapter

2424

Hotelkeepers

A hotelkeeper provides accommodations to transient persons called guests.

Subject to exceptions, at common law hotelkeepers were absolutely liable for loss or damage to their guests’ property.

Most states, however, provide a method of limiting this liability.

A hotelkeeper has a lien on the property of the guest for the agreed charges.