1. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning Chapter 22 Legal Aspects of Supply Chain Management Twomey Jennings Anderson’s Business Law and the Legal Environment, Comprehensive 20e Anderson’s Business Law and the Legal Environment, Standard 20e Business Law: Principles for Today’s Commercial Environment 2e

2. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 2 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.

3. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 3 Warehouse Receipts

4. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 4 Rights of Holders of Warehouse 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.

5. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 5 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)

6. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 6 Limitation of Liability of Warehouser 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.

7. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 7 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.

8. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 8 Common Carriers A common carrier of goods transports goods received from the general public, and issues a bill of lading or an airbill. –Bills of lading are documents of title and provide rights similar to a warehouse receipt.

9. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 9 Common Carriers 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.

10. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 10 Common Carriers Warranties. Rights of Common Carrier. –Security lien interest on goods that it transports. –Right to compensation per agreement. Duties of Common Carriers. –Deliver the goods as agreed.

11. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 11 Liabilities of Common Carrier A common carrier is absolutely liable for loss or damage to the goods. Exceptions: –Loss was caused solely by an act of God, –Act of a public enemy, –Act of a public authority, –Act of the shipper, or –Inherent nature of the goods.

12. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 12 Liabilities of Common Carrier Carrier’s Liability for Delay. Limitation of Liability of Carrier by contract. Notice of Claim. COD Shipment. –No delivery without first receiving payment. –If not, then it is liable to shipper for loss. Rejected Shipments.

13. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 13 Factors and Consignments 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.

14. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 14 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.