Comprehensive Volume, 18 th Edition Chapter 24: Legal Aspects of Supply Chain Management

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.

Warehouse Receipts

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.

Due Negotiation of Receipt WAREHOUSER (Issuer) (Bailee) WAREHOUSE RECEIPT BUYER PURCHASER OF WAREHOUSE RECEIPT WAREHOUSE RECEIPT Indorsement and delivery value/good faith due negotiation right to goods or right to negotiate further GOODS SELLER (Depositor) (Bailee)

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.

Types of Carriers Common Carriers Furnish transportation of goods for a price; available to the general public. Contract Carriers Furnish transportation of goods according to a specific contract with a specific party. Private Carriers Transport goods owned by the carrier’s owners.

Common Carrier of Goods A 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.

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.

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.