- Consolidated Laws - Uniform Commercial Code
PART 2
WAREHOUSE RECEIPTS: SPECIAL PROVISIONS
Section 7--201. Who May Issue a Warehouse Receipt; Storage Under
Government Bond.
(1) A warehouse receipt may be issued by any warehouseman.
(2) Where goods including distilled spirits and agricultural
commodities are stored under a statute requiring a bond against
withdrawal or a license for the issuance of receipts in the nature of
warehouse receipts, a receipt issued for the goods has like effect as a
warehouse receipt even though issued by a person who is the owner of the
goods and is not a warehouseman.
Section 7--202. Form of Warehouse Receipt; Essential Terms; Optional
Terms.
(1) A warehouse receipt need not be in any particular form.
(2) Unless a warehouse receipt embodies within its written or printed
terms each of the following, the warehouseman is liable for damages
caused by the omission to a person injured thereby:
(a) the location of the warehouse where the goods are stored;
(b) the date of issue of the receipt;
(c) the consecutive number of the receipt;
(d) a statement whether the goods received will be delivered to
the bearer, to a specified person, or to a specified person
or his order;
(e) the rate of storage and handling charges, except that where
goods are stored under a field warehousing arrangement a
statement of that fact is sufficient on a non-negotiable
receipt;
(f) a description of the goods or of the packages containing
them;
(g) the signature of the warehouseman, which may be made by his
authorized agent;
(h) if the receipt is issued for goods of which the warehouseman
is owner, either solely or jointly or in common with others,
the fact of such ownership; and
(i) a statement of the amount of advances made and of liabilities
incurred for which the warehouseman claims a lien or security
interest (Section 7--209). If the precise amount of such
advances made or of such liabilities incurred is, at the time
of the issue of the receipt, unknown to the warehouseman or
to his agent who issues it, a statement of the fact that
advances have been made or liabilities incurred and the
purpose thereof is sufficient.
(3) A warehouseman may insert in his receipt any other terms which are
not contrary to the provisions of this Act and do not impair his
obligation of delivery (Section 7--403) or his duty of care (Section
7--204). Any contrary provisions shall be ineffective.
Section 7--203. Liability for Non-Receipt or Misdescription.
A party to or purchaser for value in good faith of a document of title
other than a bill of lading relying in either case upon the description
therein of the goods may recover from the issuer damages caused by the
non-receipt or misdescription of the goods, except to the extent that
the document conspicuously indicates that the issuer does not know
whether any part or all of the goods in fact were received or conform to
the description, as where the description is in terms of marks or labels
or kind, quantity or condition, or the receipt or description is
qualified by "contents, condition and quality unknown", "said to
contain" or the like, if such indication be true, or the party or
purchaser otherwise has notice.
Section 7--204. Duty of Care; Contractual Limitation of Warehouseman`s
Liability.
(1) A warehouseman is liable for damages for loss of or injury to the
goods caused by his failure to exercise such care in regard to them as a
reasonably careful man would exercise under like circumstances but
unless otherwise agreed he is not liable for damages which could not
have been avoided by the exercise of such care.
(2) Damages may be limited by a term in the warehouse receipt or
storage agreement limiting the amount of liability in case of loss or
damage, and setting forth a specific liability per article or item, or
value per unit of weight, beyond which the warehouseman shall not be
liable; provided, however, that such liability may on written request of
the bailor at the time of signing such storage agreement or within a
reasonable time after receipt of the warehouse receipt be increased on
part or all of the goods thereunder, in which event increased rates may
be charged based on such increased valuation, but that no such increase
shall be permitted contrary to a lawful limitation of liability
contained in the warehouseman`s tariff, if any. No such limitation is
effective with respect to the warehouseman`s liability for conversion to
his own use.
(3) Reasonable provisions as to the time and manner of presenting
claims and instituting actions based on the bailment may be included in
the warehouse receipt or tariff.
Section 7--205. Title Under Warehouse Receipt Defeated in Certain Cases.
A buyer in the ordinary course of business of fungible goods sold and
delivered by a warehouseman who is also in the business of buying and
selling such goods takes free of any claim under a warehouse receipt
even though it has been duly negotiated.
Section 7--206. Termination of Storage at Warehouseman`s Option.
(1) A warehouseman may on notifying the person on whose account the
goods are held and any other person known to claim an interest in the
goods require payment of any charges and removal of the goods from the
warehouse at the termination of the period of storage fixed by the
document, or, if no period is fixed, within a stated period not less
than thirty days after the notification. If the goods are not removed
before the date specified in the notification, the warehouseman may sell
them in accordance with the provisions of the section on enforcement of
a warehouseman`s lien (Section 7--210).
(2) If a warehouseman in good faith believes that the goods are about
to deteriorate or decline in value to less than the amount of his lien
within the time prescribed in subsection (1) for notification,
advertisement and sale, the warehouseman may specify in the notification
any reasonable shorter time for removal of the goods and in case the
goods are not removed, may sell them at public sale held not less than
one week after a single advertisement or posting.
(3) If as a result of a quality or condition of the goods of which the
warehouseman had no notice at the time of deposit the goods are a hazard
to other property or to the warehouse or to persons, the warehouseman
may sell the goods at public or private sale without advertisement on
reasonable notification to all persons known to claim an interest in the
goods. If the warehouseman after a reasonable effort is unable to sell
the goods he may dispose of them in any lawful manner and shall incur no
liability by reason of such disposition.
(4) The warehouseman must deliver the goods to any person entitled to
them under this Article upon due demand made at any time prior to sale
or other disposition under this section.
(5) The warehouseman may satisfy his lien from the proceeds of any
sale or disposition under this section but must hold the balance for
delivery on the demand of any person to whom he would have been bound to
deliver the goods.
Section 7--207. Goods Must Be Kept Separate; Fungible Goods.
(1) Unless the warehouse receipt otherwise provides, a warehouseman
must keep separate the goods covered by each receipt so as to permit at
all times identification and delivery of those goods except that
different lots of fungible goods may be commingled.
(2) Fungible goods so commingled are owned in common by the persons
entitled thereto and the warehouseman is severally liable to each owner
for that owner`s share. Where because of overissue a mass of fungible
goods is insufficient to meet all the receipts which the warehouseman
has issued against it, the persons entitled include all holders to whom
overissued receipts have been duly negotiated.
Section 7--208. Altered Warehouse Receipts.
Where a blank in a negotiable warehouse receipt has been filled in
without authority, a purchaser for value and without notice of the want
of authority may treat the insertion as authorized. Any other
unauthorized alteration leaves any receipt enforceable against the
issuer according to its original tenor.
Section 7--209. Lien of Warehouseman.
(1) A warehouseman has a lien against the bailor on the goods covered
by a warehouse receipt or on the proceeds thereof in his possession for
charges for storage or transportation (including demurrage and terminal
charges), insurance, labor, or charges present or future in relation to
the goods, and for expenses necessary for preservation of the goods or
reasonably incurred in their sale pursuant to law. If the person on
whose account the goods are held is liable for like charges or expenses
in relation to other goods whenever deposited and it is stated in the
receipt that a lien is claimed for charges and expenses in relation to
other goods, the warehouseman also has a lien against him for such
charges and expenses whether or not the other goods have been delivered
by the warehouseman. But against a person to whom a negotiable warehouse
receipt is duly negotiated a warehouseman`s lien is limited to charges
in an amount or at a rate specified on the receipt or if no charges are
so specified then to a reasonable charge for storage of the goods
covered by the receipt subsequent to the date of the receipt.
(2) The warehouseman may also reserve a security interest against the
bailor for a maximum amount specified on the receipt for charges other
than those specified in subsection (1), such as for money advanced and
interest. Such a security interest is governed by the Article on Secured
Transactions (Article 9).
(3) A warehouseman`s lien for charges and expenses under subsection
(1) or a security interest under subsection (2) is also effective
against any person who so entrusted the bailor with possession of the
goods that a pledge of them by him to a good faith purchaser for value
would have been valid but is not effective against a person as to whom
the document confers no right in the goods covered by it under Section
7--503.
(4) A warehouseman loses his lien on any goods which he voluntarily
delivers or which he unjustifiably refuses to deliver.
Section 7--210. Enforcement of Warehouseman`s Lien.
(1) Except as provided in subsection (2), a warehouseman`s lien may be
enforced by public or private sale of the goods in bloc or in parcels,
at any time or place and on any terms which are commercially reasonable,
after notifying all persons known to claim an interest in the goods.
Such notification must include a statement of the amount due, the nature
of the proposed sale and the time and place of any public sale, and,
unless the goods are perishable or threaten to decline speedily in
value, it shall state that any person claiming an interest in the goods
is entitled to bring a proceeding under section 7-211 within ten days of
the service of the notice if he disputes the validity of the lien or the
amount claimed. The fact that a better price could have been obtained by
a sale at a different time or in a different method from that selected
by the warehouseman is not of itself sufficient to establish that the
sale was not made in a commercially reasonable manner. If the
warehouseman either sells the goods in the usual manner in any
recognized market therefor, or if he sells at the price current in such
market at the time of his sale, or if he has otherwise sold in
conformity with commercially reasonable practices among dealers in the
type of goods sold, he has sold in a commercially reasonable manner. A
sale of more goods than apparently necessary to be offered to insure
satisfaction of the obligation is not commercially reasonable except in
cases covered by the preceding sentence.
(2) A warehouseman`s lien on goods other than goods stored by a
merchant in the course of his business may be enforced only as follows:
(a) All persons known to claim an interest in the goods must be
notified.
(b) The notification must be delivered in person or sent by
registered or certified letter to the last known address of
any person to be notified.
(c) The notification must include an itemized statement of the
claim, a description of the goods subject to the lien, a
demand for payment within a specified time not less than ten
days after receipt of the notification, a conspicuous
statement that unless the claim is paid within that time the
goods will be advertised for sale and sold by auction at a
specified time and place, and a statement that any person
claiming an interest in the goods is entitled to bring a
proceeding under section 7-211 within ten days of the service
of the notice if he disputes the validity of the lien or the
amount claimed.
(d) The sale must conform to the terms of the notification.
(e) The sale must be held at the nearest suitable place to that
where the goods are held or stored.
(f) After the expiration of the time given in the notification,
an advertisement of the sale must be published once a week
for two weeks consecutively in a newspaper of general
circulation where the sale is to be held. The advertisement
must include a description of the goods, the name of the
person on whose account they are being held, and the time and
place of the sale. The sale must take place at least fifteen
days after the first publication. If there is no newspaper of
general circulation where the sale is to be held, the
advertisement must be posted at least ten days before the
sale in not less than six conspicuous places in the
neighborhood of the proposed sale.
(3) Before any sale pursuant to this section any person claiming a
right in the goods may pay the amount necessary to satisfy the lien and
the reasonable expenses incurred under this section. In that event the
goods must not be sold, but must be retained by the warehouseman subject
to the terms of the receipt and this Article.
(4) The warehouseman may buy at any public sale pursuant to this
section.
(5) A purchaser in good faith of goods sold to enforce a
warehouseman`s lien takes the goods free of any rights of persons
against whom the lien was valid, despite noncompliance by the
warehouseman with the requirements of this section.
(6) The warehouseman may satisfy his lien from the proceeds of any
sale pursuant to this section but must hold the balance, if any, for
delivery on demand to any person to whom he would have been bound to
deliver the goods.
(7) The rights provided by this section shall be in addition to all
other rights allowed by law to a creditor against his debtor.
(8) Where a lien is on goods stored by a merchant in the course of his
business the lien may be enforced in accordance with either subsection
(1) or (2).
(9) The warehouseman is liable for damages caused by failure to comply
with the requirements for sale under this section and in case of willful
violation is liable for conversion.
Section 7-211. Proceeding to Determine Validity of Lien.
Within ten days after service of the notice of sale, a person claiming
an interest in the goods may commence a special proceeding to determine
the validity of the lien. The special proceeding may be brought in any
court which would have jursidiction to render a judgment for a sum equal
to the amount of the lien. If the person shall show that the
warehouseman is not entitled to claim a lien in the goods, or that all
or part of the amount claimed by the warehouseman has not been properly
charged to the account of such person, or, as the case may be, that all
or part of such amount exceeds the fair and reasonable value of the
services performed by the warehouseman, the court shall direct the entry
of judgment cancelling the lien or reducing the amount claimed
thereunder accordingly. If the warehouseman shall establish the validity
of the lien, in whole or in part, the judgment shall fix the amount
thereof, and shall provide that the sale may proceed upon the expiration
of five days after service of a copy of the judgment together with
notice of entry thereof upon the person, unless the goods are redeemed
prior thereto pursuant to subsection (3) of section 7-210. If the lien
is cancelled, the judgment shall provide that, upon service of a copy of
the judgment together with notice of entry thereof upon the
warehouseman, the person shall be entitled to possession of the
property.
