WAREHOUSE RECEIPTS LAW

Section 1: Persons Who May Issue Receipts

1. Eligibility to Issue Receipts: Any warehouseman (a person or entity responsible for

storing goods) can issue warehouse receipts.
Section 2: Form of Receipts; Essential Terms

1. Requirements for Warehouse Receipts:

o Warehouse receipts don’t require a specific format, but they must include certain
essential details:
 Location of the warehouse where goods are stored.
 Date of issue.
 Consecutive receipt number.
 Delivery instructions (e.g., whether the goods are for the bearer or a
specified person).
 Storage charges rate.
 A description of the goods or packages.
 Signature of the warehouseman or authorized agent.
 If the warehouseman is the owner of the goods, a statement of ownership.
 A statement of any advances made or liabilities incurred for which the
warehouseman claims a lien on the goods.
2. Liability for Omission: If any required terms are omitted from the receipt, the
warehouseman is liable for damages to any person affected by the omission.
Section 3: Form of Receipts – Additional Terms

1. Additional Terms: A warehouseman may include other terms, but these must not:
o Contradict the law.
o Impair the warehouseman's duty to care for the goods as a reasonably careful
owner would.
Section 4: Definition of Non-Negotiable Receipt

1. Non-Negotiable Receipt: A receipt that specifies the goods will be delivered to the
depositor or a specified person.
Section 5: Definition of Negotiable Receipt

1. Negotiable Receipt: A receipt stating the goods will be delivered to the bearer or any
person named in the receipt. This type of receipt is transferable.
Section 6: Duplicate Receipts Must Be Marked

1. Marking Duplicate Receipts: When multiple negotiable receipts are issued for the same
goods, the word "duplicate" must be marked on all but the first receipt issued.
2. Liability for Misleading Purchases: If a duplicate is not marked and a subsequent buyer
purchases it in good faith, the warehouseman is liable for damages if the goods have
already been delivered.
Section 7: Failure to Mark "Non-Negotiable"

1. Non-Negotiable Receipt Marking: A non-negotiable receipt must be clearly labeled

with "non-negotiable" or "not negotiable."
2. Liability for Failure to Mark: If the warehouseman fails to mark the receipt properly, a
holder who purchases it in good faith may treat it as a negotiable receipt and hold the
warehouseman liable as if it were negotiable.
Section 8: Obligation of Warehousemen to Deliver

1. Warehouseman's Duty to Deliver: The warehouseman must deliver the goods if a valid
demand is made by the holder of the receipt or the depositor. The demand must include:
o An offer to settle the warehouseman's lien.
o Surrender of the negotiable receipt, if applicable, with necessary endorsements.
o Willingness to sign an acknowledgment of delivery.
Section 9: Justification of Warehouseman in Delivering

1. Who Can Receive Goods: The warehouseman is justified in delivering goods to:
o The person lawfully entitled to the goods or their agent.
o A person holding a non-negotiable receipt or with written authority from the
entitled person.
o A person holding a negotiable receipt, either as bearer or endorsed.
Section 10: Warehouseman’s Liability for Misdelivery

1. Liability for Wrongful Delivery: If the warehouseman delivers goods to someone not
entitled to them, they are liable for conversion. This applies even if the person was
entitled under certain conditions but the delivery was not authorized or was made in
error.
Section 11: Negotiable Receipt Must Be Cancelled When Goods Are Delivered

1. Duty to Cancel Receipt: When the warehouseman delivers the goods for which a
negotiable receipt was issued, they must cancel the receipt.
2. Liability for Failure to Cancel: If the warehouseman fails to cancel the receipt and the
receipt is later purchased by a good-faith buyer, the warehouseman is liable for the failure
to deliver the goods, regardless of when the buyer acquires the receipt.
Section 12: Negotiable Receipts Must Be Cancelled or Marked When Part of Goods Delivered

1. Partial Delivery of Goods: When only part of the goods is delivered, the warehouseman
must either:
o Cancel the receipt, or
o Mark the receipt to indicate which part of the goods has been delivered.
2. Liability for Failure to Mark or Cancel: If the warehouseman fails to do this, they are
liable for damages to anyone who purchases the receipt in good faith.
Section 13: Altered Receipts

1. Effect of Receipt Alteration: The warehouseman remains liable even if the receipt is
altered, provided the alteration was:
o Immaterial, authorized, or made without fraudulent intent.
2. Fraudulent Alterations: If the alteration is material and fraudulent, the warehouseman is
liable to the original terms of the receipt before the alteration, unless the purchaser
acquired the altered receipt in good faith without notice.
Section 14: Lost or Destroyed Receipts

1. Court-Ordered Delivery: If a negotiable receipt is lost or destroyed, a court can order

the delivery of goods after proof of loss, and the person seeking delivery may be required
to provide a bond to protect the warehouseman from liability.
Section 15: Effect of Duplicate Receipts

1. Representation of Duplicate Receipts: A receipt labeled "duplicate" represents an

accurate copy of the original receipt but does not impose additional liability on the
warehouseman beyond confirming its status as a copy.
Section 16: Warehouseman Cannot Set Up Title in Himself

1. Warehouseman’s Title: A warehouseman cannot claim ownership or right to possession

of goods unless the title comes from the depositor or from a lien.
Section 17: Interpleader of Adverse Claimants

1. Adverse Claims: If multiple parties claim ownership of the goods, the warehouseman
may require all claimants to interplead, either as a defense or original suit.
Section 18: Warehouseman Has Reasonable Time to Determine Validity of Claims

1. Claim Validation: The warehouseman is not liable if they take a reasonable amount of
time to verify an adverse claim before making delivery.
Section 19: Adverse Title Is No Defense Except as Provided

1. No Defense for Third-Party Claims: Except for specific circumstances in previous

sections, the warehouseman is not excused from delivering the goods based on a third-
party's adverse claim.
Section 20: Liability for Non-Existence or Misdescription of Goods

1. Liability for Misdescription: If the warehouseman misdescribes the goods or if the

goods do not exist, they are liable for damages. However, statements like "said to be" do
not create liability if the description is accurate.
Section 21: Liability for Care of Goods

1. Care Liability: The warehouseman is liable for any loss or injury to the goods due to
failure to exercise reasonable care.
Section 22: Goods Must Be Kept Separate

1. Separation Requirement: Goods must be kept distinct from others to ensure they can be
identified and returned.
Section 23: Fungible Goods May Be Commingled

1. Commingling of Fungible Goods: With authorization, a warehouseman may mix

fungible goods (goods of the same type), and the depositors will share in the common
mass based on their contribution.
Section 24: Liability for Commingled Goods

1. Liability for Commingled Goods: A warehouseman is liable for the care and redelivery
of each depositor's share of commingled goods as if they were kept separate.
Section 25: Attachment or Levy Upon Goods for Negotiable Receipts

1. Lien Protection: Goods for which a negotiable receipt has been issued cannot be
attached or levied upon while in the warehouseman's possession unless the receipt is
surrendered or its negotiation is enjoined.

Section 26: Creditors' Remedies to Reach Negotiable Receipts - Key Points

1. Who it applies to: A creditor whose debtor owns a negotiable receipt (a document
representing goods stored in a warehouse).
2. Legal Action: The creditor can seek help from the court to access the negotiable receipt
or the goods it represents.
3. Court's Role: The creditor can request the court for remedies like injunctions or other
legal actions to:
a. Attach the negotiable receipt, or
b. Use the receipt to satisfy the creditor's claim.
4. Reason for Special Remedy: Negotiable receipts are not easy to seize using regular legal
processes (like attaching property), so this section provides an alternative, allowing
creditors to access the goods or receipt more easily.
5. Applicable Laws: The remedies are available according to laws and equity in the
jurisdiction (the islands in this case), offering special legal treatment for such property.

Section 27: What Claims Are Included in Warehouseman's Lien

1. Warehouseman’s Lien: The warehouseman has a lien for storage, preservation, and
other related costs, including any advances made, insurance, and labor related to the
goods.
Section 28: Against What Property the Lien May Be Enforced

1. Enforceability of Lien: The lien may be enforced against goods belonging to the person
liable for the claim, including those held by the debtor but owned by others.
Section 29: How the Lien May Be Lost

1. Loss of Lien: The warehouseman loses the lien if they surrender possession of the goods
or refuse to deliver when required by law.
Section 30: Negotiable Receipt Must State Charges for Lien

1. Receipt Must List Lien Charges: A negotiable receipt must specify any charges for
which the warehouseman claims a lien.
Section 31. Warehouseman need not deliver until lien is satisfied

1. Lien Enforcement: A warehouseman may refuse to deliver goods to any person

demanding them until the warehouseman’s lien, valid against the person demanding the
goods, is satisfied.
2. Lien Satisfaction: The lien must be settled before the goods are delivered.
Section 32. Warehouseman’s lien does not preclude other remedies

1. Alternative Remedies: Regardless of whether the warehouseman has a lien on the goods
or not, the warehouseman retains the right to pursue all legal remedies available to a
creditor against a debtor. These remedies allow the warehouseman to collect any charges
or advances the depositor is contractually obligated to pay.
2. Additional Legal Rights: The warehouseman’s lien does not restrict the
warehouseman’s ability to take further action to recover what is owed through other legal
means.
Section 33. Satisfaction of lien by sale

1. Notice Requirements: To satisfy a lien through sale, the warehouseman must provide an
itemized statement of the claim, showing:
o The amount due at the time of the notice.
o The date(s) when the payment is due.
o A brief description of the goods subject to the lien.
o A demand for payment by a specified date, not less than 10 days after notice
delivery (if personally delivered) or the time notice reaches its destination (if sent
by mail).
2. Warning of Sale: The notice must include a statement that the goods will be advertised
for sale and sold at auction if the lien is not satisfied by the specified deadline.
3. Sale Location: The sale must take place where the lien was acquired, or, if unsuitable, at
a different location specified by the warehouseman.
4. Advertising the Sale:
o The sale must be advertised once a week for two consecutive weeks in a
newspaper published in the locality of the sale.
o The sale must not occur less than 15 days after the first advertisement.
o If no newspaper is available, the advertisement must be posted in at least six
conspicuous places 10 days before the sale.
5. Use of Sale Proceeds: The warehouseman may use the sale proceeds to satisfy the lien,
including reasonable costs for notice, advertisement, and the sale process.
 6. Excess Proceeds: Any proceeds remaining after satisfying the lien and related costs must
be held by the warehouseman and delivered to the rightful owner of the goods.
7. Pre-sale Payments: Before the sale, any person with a claim to the goods may pay the
warehouseman the amount owed to satisfy the lien and cover reasonable expenses
incurred up until that time. Once payment is made, the warehouseman must deliver the
goods to the rightful claimant, or retain the goods according to the terms of the original
deposit agreement.
Section 34. Perishable and hazardous goods

1. Special Circumstances: For goods that are perishable, prone to deterioration, or

hazardous (such as items that could damage other property due to leakage,
inflammability, or explosive nature), the warehouseman may provide notice to the owner
or person in whose name the goods are stored.
2. Failure to Collect: If the person fails to satisfy the lien and collect the goods within the
specified time, the warehouseman may sell the goods at public or private sale without the
need for advertising.
3. Disposal of Unsellable Goods: If the warehouseman is unable to sell the goods after
reasonable efforts, the warehouseman may dispose of the goods in any lawful manner
without incurring liability.
4. Proceeds: The proceeds from the sale or disposal of perishable or hazardous goods are to
be handled in the same manner as proceeds from sales under Section 33, satisfying the
lien and related costs.
Section 35. Other methods of enforcing lien

1. Other Legal Remedies: The warehouseman’s lien does not limit the warehouseman’s
access to other remedies allowed by law to enforce the lien against the goods or the
debtor.
2. Unpaid Claims: If the sale of goods does not cover the full amount of the
warehouseman’s claim, the warehouseman retains the right to recover the remaining
balance through other legal channels.
Section 36. Effect of sale

1. Liability After Sale: Once goods have been lawfully sold to satisfy the warehouseman’s
lien, or disposed of due to their perishable or hazardous nature, the warehouseman is not
liable for failing to deliver the goods.
2. Impact on Receipts: This holds even if the receipt for the goods was negotiable,
meaning the warehouseman is not obligated to deliver the goods to the depositor, owner,
or holder of the receipt after the lawful sale or disposal.