Warehouse Receipts

Warehouse Receipt documents should be printed, signed by the warehouse manager, and issued to the customer. Under the law a warehouser is not required to issue receipts, but courts have ruled that:

”... a failure to issue or deliver such receipt constitutes negligence on the part of the warehouseman for which he may be held liable for any loss occasioned thereby to the depositor.” [1]

Therefore, every warehouser needs to issue receipts at all times, and to be certain that these documents satisfy his legal responsibilities.

Terms Required by the U.C.C.

The warehouser’s legal responsibilities are stated in the Uniform Commercial Code (U.C.C.) Section 7-202(2):

Unless a warehouse receipt embodies within its written or printed terms each of the following, the warehouse is liable for damages caused by the omission to a person injured thereby:

  1. the location of the warehouse where the goods are stored;
  2. the date of issue of the receipt;
  3. the consecutive number of the receipt;
  4. a statement whether the goods received will be delivered to the bearer, to a specified person, or to a specified person or his order;
  5. 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;
  6. a description of the goods or of the packages containing them;
  7. the signature of the warehouseman, which may be made by his authorized agent;
  8. if the receipt is issued for goods of which the warehouseman is the owner, either solely or jointly in common with others, the fact of such ownership; and
  9. 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 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. [2]

So a warehouser is not required to issue receipts, and receipts do not have to contain particular terms, but failure to issue receipts including the preceding terms makes the warehouser laible in any disputes involving those omissions.

Warehouse Receipt Documents

Issuing Warehouse Receipts is a fundamental aspect of warehousing by which the warehouser protects his own interests and notifies the customer of the shared obligations for care of goods.

In this context, the WARES program provides automated steps to issue receipt documents which meet legal requirements as stated previously. The document form used by WARES may be viewed here: Non-Negotiable Warehouse Receipt (blank).

U.C.C. Required Elements

a. Warehouse Buildings

The top line of the receipt states the operating name of the warehouse company, with the physical location of the warehouse storage building stated below that.

_images/receipt-a-b-c.png

b. Consecutive Receipt Number

To guarantee that every receipt is actually issued, the warehouse manager should maintain a register of the consecutive numbers when signing receipts. A portion of a sample hand register of consecutive receipts is shown following:

_images/receipt-register.png

When using a receiving document to update inventory without issuing a receipt, the consumed numbers should be noted in this register as either balances posted into history, such as inventory starting balances (UNISSUED), or as transactions entered in error and then deleted (VOIDED). (Unissued and voided documents are maintained in the WARES database for reference.)

c. Receipt Issue Date

To the right of the warehouse building is the consecutive number of the receipt, with the date of receipt below. The receipt date is taken from the date and time that the receipt is completed and authenticated by warehouse personnel.

d. Delivery Orders

Where standard terms must be expressed, the language is pre-printed on the face of the warehouse receipt. This includes the agreed delivery terms for the warehouse, as required in U.C.C. item (d).

_images/receipt-d.png

e. Storage and Handling Rates

Typically storage and handling rates do vary from customer to customer, and the rates may vary from product to product within a customer. Therefore rates are listed for each received product, as shown in the following figure:

_images/receipt-e-f-i.png

WARES uses code 1R to represent Receiving Storage and code 1H for Receiving Handling. This example shows industry recognized unit of measure codes CW for Hundredweight and RL for roll to complete the rate extension. (The warehouse may also charge minimum fees, or a storage fee may be prorated, in which case rates do not extend to the amount column.)

f. Description of Goods

The description of goods includes the textual name, identifiers and marks, and counts and weights.

g. The Warehouser’s Signature

The warehouse manager or his authorized agent should sign every warehouse receipt, and receipts should be recorded in the receipt register as they are issued.

_images/receipt-g-h.png

i. Statement of Liabilities

Rates are known when the warehouse receipt is finalized, and so the extension of the rates and a total of the liabilities (charges due) is part of the receipt. The Liability Limitation also clarifies that the warehouse lien covers this receipt and any charges due from the customer on other accounts.

Other Receipt Terms

Other parts of the law and court decisions based on it extend the warehouser’s responsibilities beyond the previously stated requirements. In general, a warehouser is expected to care for deposited goods using the actions of a reasonable person who is capable in his job, who is generally knowledgeable (about warehousing), knows the legal requirements, and is fair-minded. [3]

In return, the warehouser may contract for certain rights. The receipt must include information relevant to these rights, so that the warehouser can receive these benefits.

a. Received Condition

The warehouser is responsible for the quantity and condition of goods once received. Overages, shortages, and damage which exist when goods are received must be noted on the receipt, as shown by titles in the Product Itemization.

b. Storage Type Zone

Warehouse locations should be zoned to match the goods in storage, and these zones must be specific enough to prevent mistakes. For example, it is not enough to use zones COOL and FROZEN in refrigeration. If frozen goods include both ice cream and dog food then ice cream can be in a general freezer. But anyone operating a freezer should know that dog food requires a separate PETFOOD room and zone.

c. Customer Instructions

A warehouser may know to separate ice cream from dog food, but many products have storage and handling requirements which are too esoteric to be generally known. The customer needs to supply these instructions with each shipment, and the specific cautions should be acknowledged on the receipt, shown in SPECIAL INSTRUCTIONS below:

_images/receipt-c1.png

d. Reference Information

Cross-reference information allows the customer to correlate a warehouse receipt with his own records, his supplier, and the carrier, as shown above.

e. Warehouser’s Lien

A warehouse may impose a lien for services, so the warehouse may demand payment before releasing goods from bailment. The Warehouser’s Lien is effective only if the rates for calculation and the Amount Due are displayed on the receipt.

f. Limitation of Liability

The receipt establishes a limitation of warehouse liability for negligence, which is taken from the Company Liability or derived from a declaration of value on the Account Setup. This Liability Limitation is printed in red in the example receipt.

View the full warehouse receipt of this example here: Example Non-Negotiable Warehouse Receipt.

Industry Contract Terms

There are several trade associations for public warehousing, with principal ones being the International Association of Refrigerated Warehouses (IARW) and the International Warehousing and Logistics Association (IWLA). These groups have promulgated standard contract terms for members to use. Familiarity with these terms is expected of corporate logistics personnel, so warehousers who adopt these standard terms can conduct business without recourse to expensive, and frequently faulty, legal representation.

Versions of these Standard Terms are posted here for reference:

INTERNATIONAL REFRIGERATED WAREHOUSE CONTRACT TERMS AND CONDITIONS

STANDARD CONTRACT TERMS AND CONDITIONS FOR MERCHANDISE WAREHOUSEMEN

Warning

Disclaimer: AAltsys Technology displays these terms as example documents commonly used in public commerce. AAltsys is not qualified to judge the accuracy, usability, or legal virtue of these terms (and we are certainly not responsible for the sexist nature of their language). The presentation of these terms does not constitute permission to use the same without authorization from the sponsoring organizations.

Footnotes

[1]William H. Towle, Warehousing Law (Oak Park, IL: Cawley Press, Ltd., 1988), 5.
[2]ibid, 6.
[3]https://en.wikipedia.org/wiki/Reasonable_person.