Draft Uniform Documents of Title Act 1995

PART 1 - WAREHOUSE RECEIPTS: SPECIAL PROVISIONS

Form of warehouse 2(1)    A warehouse receipt need not be in any particular form.

receipt

(2)    Notwithstanding subsection (1), 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 name of the person by whom or on whose behalf the goods are deposited;
(c)    the date of issue of the warehouse receipt;
(d)    a statement that the goods received will be delivered to the holder thereof, or that the goods will be delivered to bearer or to the order of a named person;
(e)    the rate of storage and handling charges;
(f)    a description of the goods or of the packages containing them;
(g)    the signature of the warehouseman or of an authorized agent of the warehouseman; and
(h)    a statement of the amount of any advance made and of any liability incurred for which the warehouseman claims a lien.

(3)    A warehouseman may insert in the warehouseman's warehouse receipt any other terms which are not contrary to the provisions of this Act and do not impair the warehouseman's obligation of delivery.

Legislation
UWRA (Can.), s.2; UCC 7-202.

Comment

This provision is substantially the same as section 2 of the Uniform Warehouse Receipts Act (Can.), except that the information requirements extend to non-negotiable warehouse receipts as well (the UWRA provision only applied to negotiable warehouse receipts).

Liability for non-receipt or misdecription

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(1) A party to or purchaser for value in good faith of a document of title, other than a bill of lading, who relies on the description of the goods contained in the document may recover from the issuer damages caused by the non-receipt or misdescription of the goods, except where the document conspicuously indicates that the issuer does not know whether any part or all of the goods were received or conform to the description, and that indication is true.

(2)    Where a description on the goods or on the packages containing the goods indicates that the goods are said by the depositor to be goods of a certain kind, or by a statement of similar import, the statement does not impose any liability on the warehouseman in respect of the nature, kind or quality of the goods.

Legislation
UCC 7-203, UWRA (Can.), ss.11 and 12.

Comment

The provision is similar to sections 11 and 12 of the UWRA (Can.) except that it extends to purchasers for value of documents of title and to a party to the document of title (whereas the sections of the UWRA (Can.) are limited to holders of negotiable warehouse receipts). This expansion in scope will allow the consignee of a non-negotiable warehouse receipt to sue for damages caused by non-receipt or misdescription on the part of the warehouseman. This would apply where the owner stored goods and had the warehouse receipt made out in the name of a bank which would thereby obtain a possessory security interest in the goods. It is unlikely that the owner of the goods could invoke this provision because the owner does not typically rely upon the description of the goods contained in the warehouse receipt.

Ordinary course of busienss of fungible goods 4. 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 fungible goods, takes free of any claim under a warehouse receipt even though it has been duly negotiated.

Legislation
UCC 7-205

Comment

The comment to UCC Art. 7-205 indicates that the typical case covered by the provision is that of an insolvent warehouseman dealer in grain. The issue is whether the receipt holder can trace and recover grain shipped to farmers and other purchasers from the elevator. The provision resolves the conflict in favour of the ordinary course buyer, and in this respect is similar to the ordinary course buyer rule found in personal property security legislation.

Termination of storage at warehouseman's option

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(1)    A warehouseman may, on notifying the person on whose account goods are held and any other person known to claim an interest in the goods, require payment of any charges and may require removal of the goods from the warehouse

(a)    at the termination of the period of storage fixed by the document; or

(b)    if no period is fixed, within a stated period not less than thirty days after the notification.

(2)    If a notification is given under subsection (1)(b) and the goods are not removed before the date specified in the notification, the warehouseman may sell them in accordance with the Uniform Warehouseman's Lien Act.

(3)    Where a warehouseman, in good faith, believes that the goods are about to deteriorate or decline in value to less than the amount of the warehouseman's lien within the time prescribed in subsection (1), then the warehouseman may specify in the notification any reasonably shorter time for removal of the goods.

(4)    If the goods are not removed within the time specified in the notification under subsection (3), the warehouseman may sell them at public sale held not less than 10 days after a single advertisement or posting.

(5)    Where, as a result of the 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 any person, 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.

(6)    The warehouseman may, after a reasonable effort is unable to sell the goods under subsection (5), dispose of the goods in any lawful manner and shall incur no liability by reason of that disposition.

(7)    The warehouseman may satisfy the warehouseman's lien from the proceeds of any sale or disposition under this section but must hold any balance remaining for payment on the demand to any person to whom the warehouseman would have been bound to deliver the goods.

Legislation

UCC 7-206, UWRA (Can.), s.17.

Comment

1.    This provision is an expanded version of section 17 of the UWRA (Can.). The provision defines the power of the warehouseman to terminate the bailment. This is important because warehousing is often contracted for an indefinite term. The 30 day period provided when the document does not carry its own period of termination corresponds to commercial practice of computing rates on a monthly basis (see Official Comment to UCC 7-206).

2.    The UWRA (Can.) did not distinguish between the case where the warehouseman knowingly undertook to store perishable or hazardous goods and the case where the warehouseman did not have such knowledge until after storage of the goods. The provision distinguishes between these two situations and provides that the summary power of removal and sale only applies to the latter.

Separation of goods: fungible goods

6 (1)    Unless a warehouse receipt otherwise provides, a warehouseman must keep thegoods covered by each warehouse receipt separate and apart so as to permit the
identification anddelivery of those goods.

(2)    Notwithstanding subsection (1) fungible goods covered by a warehouse receipt may be commingled.

(3)    Fungible goods that are commingled are owned in common by the persons entitled to them and the warehouseman is severally liable to each owner for that owner's share of the goods.

(4)    Where a mass of fungible goods is insufficient to meet all of the warehouse receipts which the warehouseman has issued against those goods, then each holder of a warehouse receipt is entitled to such proportion of the mass as the quantity shown by that person's warehouse receipt to have been deposited bears to the whole.

Legislation

UCC 7-207, UWRA (Can.) s. 14.

Comment

This is an expanded version of section 14 of the UWRA (Can.), which only dealt with commingled goods. The provision establishes the duty to keep the goods separate and apart unless the contract provides otherwise.

Altered warehouse receipts

7 (1)    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     blank filled in as authorized.

(2)    Subject to subsection (1), where there is an unauthorized alteration of a warehouse receipt, the warehouse receipt is enforceable against the issuer according to its original tenor.

Legislation
UCC 7-208

Comment

The provision deals with the situation where a warehouse receipt is issued in blank or where an unauthorized alteration is made. There is no similar provision in the UWRA (Can.). The inclusion of the provision is desirable because warehouse receipts were not regarded as documents of title under the common law and therefore the issue of altered warehouse receipts is not addressed in the decisional law.

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