242019663-Warehouse-Receipt-Law-Reviewer.docx

THE WAREHOUSE RECEIPTS LAW (ACT NO. 2137, AS AMENDED) 1

PURPOSE OF THE WRL a. To prescribe the rights and duties of a warehouseman; b. To regulate the relationship between a warehouseman and the depositor of goods, or the holder of a warehouse receipts for the goods, or other persons; c. To render title to, and right of possession of, property stored in warehouse more easily convertible; d. To protect those who, in good faith and for value, acquire negotiable warehouse receipts by negotiation. WAREHOUSE RECEIPT 1. It is a written acknowledgement by a warehouseman that he has received and holds certain goods therein described in store for the person to whom it is issued. (Talengtan Bros. & Sons vs. CA, G.R. No. L-110581, Sept. 21, 1994) 2. It is a simple written contract between the owner of the goods and the warehouseman to pay the compensation for that service. 3. It is a bilateral contract. It imports that goods are in the hands of a warehouseman and is a symbolical representation of the property itself. Warehouseman / Bailee –A person (natural or juridical) lawfully engaged in the business of storing goods for profit. WHO MAY ISSUE WAREHOUSE RECEIPTS Only a warehouseman may issue warehouse receipts to put said warehouse receipts within the purview of the WRL. FORM OF RECEIPTS; ESSENTIAL TERMS 1. The location of the warehouse where the goods are stored; 2. The date of issue of the receipt; 3. 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 charges; 6. A description of the goods or of the package 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 owner, either solely or jointly or in common with others, the fact of such ownership; 9. A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims as lien. If the precise amount for such advances made or of such liabilities incurred is, at the same time of the issue of the receipt, unknown to the warehouseman or his agent who issues it, a statement of the fact that advances have been made or liabilities incurred and the purpose thereof is sufficient. EFFECT OF OMISSION OF THE ESSENTIAL CONTENTS 1. A warehouseman shall be liable to any person injured thereby all damages caused by the omission from a ngotiable receipt of any of the terms herein required; 2. Validity of receipt not affected; 3. Negotiability of receipt not affected. TERMS THAT CANNOT BE INCLUDED IN THE WAREHOUSE RECEIPT 1. Those contrary to any provision of the law; 2. In any wise impair the warehouseman's obligation to exercise that degree of care in the safekeeping of the goods entrusted to him which a reasonably careful man would exercise with regard to similar goods of his own.

Prepared By: C.E.V.A

Document of Title to Goods – Any document used in the ordinary course of business, in the sale/transfer of goods, as proof of possession or control of the goods, or authorizing or purporting to authorize the possessor of the document to transfer or receive either by indorsement or by delivery, goods represented by such document. (Art. 1636,NCC) COMMON TYPES OF DOCUMENT OF TITLE 1. Bill of Lading - written acknowledgement of the receipt of goods and an agreement to transport and to deliver them at a specified place to a person named therein or on his order. a. On Board Bill of Lading – issued when the goods have been actually placed aboard the ship with very reasonable expectation that the shipment is as good as on its way. b. Port Bill of Lading – issued by the carrier to whom the goods have been delivered and the vessel indicated in the bill of lading by which the goods are to be shipped is already in the port where the goods are held for shipment. 2. Quedan – warehouse receipt that covers sugar. 3. Dock Warrant – warrant given by dock owners to the owner of merchandise imported and warehoused on the dock, upon the faith of the bills of lading, as a recognition of his title to the goods. FUNCTIONS OF DOCUMENTS OF TITLE 1. Evidence of receipt of goods; 2. Represents the goods and therefore operates as transferrable document that carries with it the control over the goods. It is used to pass title to the goods; 3. It is a contract. MEANING OF NEGOTIABLE UNDER THE ACT It indicates that in the passage of warehouse receipts through the channels of commerce, the law regards the property which they describe as following them and gives to their regular transfer by indorsement the effect of manual delivery of the things specified in them. Negotiable Warehouse Receipts - A negotiable warehouse receipt is one in which it is stated that the goods received will be delivered either: 1. To the bearer; or 2. To the order of any person named in such receipt. (Sec. 5, WRL) Non-Negotiable Warehouse Receipts - A non-negotiable warehouse receipt is one in which it is stated that the goods received will be delivered to the depositor or to any specified person. DUPLICATE RECEIPTS MUST BE MARKED  When more than one is issued for the same goods, the word "duplicate" shall be plainly placed upon the face of every such receipt, except the first one issued.  A warehouseman shall be held liable for damages for failure to do so to anyone who purchased the subsequent receipt for value supposing it to be original, even though the purchaser be after the delivery of the goods by the warehouseman to the holder of the original receipt. NEGOTIATION OF WAREHOUSE RECEIPTS A. By Delivery 1. Where by the terms of the receipt, warehouseman undertakes to deliver goods to the bearer; or 2. Where by the terms of the receipt, warehouseman undertakes to deliver goods to the order of a specified person,

the the the the and

such person or a subsequent indorsee of the receipt has indorsed it in blank or bearer. The bearer document is not always a bearer document. A special indorsement has the effect of converting the bearer instrument into an order instrument. B.

By Indorsement Coupled with Delivery 1. If the receipt states that the goods are to be delivered to the order of a person named therein; 2. Effects when indorsement is necessary but the negotiable receipt was only delivered: a. The transferee acquires title against the transferor; b. There is no direct obligation of the warehouseman to deliver the goods to such holder of the receipt; c. The transferee can compel the transferor to complete the negotiation by indorsing the instrument (Sec.43, WRL).The negotiation takes effect on the date of the indorsement only.

EFFECT OF NEGOTIATION OF WAREHOUSE RECEIPT Negotiation of the document has the effect of manual delivery so as to constitute the transferee the owner of the goods. RIGHTS OF A PERSON TO WHOM A RECEIPT HAS BEEN NEGOTIATED: 1. In case of receipt negotiable by delivery, such title to the goods as the person negotiating the receipt to him had or had ability to convey to a purchaser in good faith for value; 2. In case of receipt negotiable by indorsement coupled by delivery, such title to the goods as the depositor or person to whose order the goods were to be delivered by the terms of the receipt has or had ability to convey to a purchaser in good faith for value; 3. The direct obligation of the warehouseman to hold possession of the goods for him according to the terms of the receipt as fully as if the warehouseman had contracted directly with him. (Sec.41, WRL) RIGHTS OF A PERSON TO WHOM A RECEIPT HAS BEEN TRANSFERRED: 1. The title to the goods as against the transferor with respect to a negotiable warehouse receipt not duly negotiated (merely steps into the shoes); 2. The right, thereafter, to acquire the obligation of the warehouseman to hold the goods for him; and 3. If the receipt is non-negotiable, such person acquires the right to notify the warehouseman of the transfer thereof. (Sec. 42, WRL) Prior to the notification of the warehouseman by the transferor or transferee of a non-negotiable receipt, the title of the transferee to the goods and the right to acquire the obligation of the warehouseman may be defeated by: 1. The levy of an attachment or execution upon the goods by a creditor of the transferor; or 2. A notification to the warehouseman by the transferor or a subsequent purchaser from the transferor of the subsequent sale of the goods by the transferor. But-unpaid seller’s lien or right of stoppage in transitu cannot defeat the right of the holder in good faith of NWR. -Goods covered by NWR cannot be attached or levied upon unless receipt is surrendered. WAREHOUSEMAN’S DEFENSES FOR NON-DELIVERY OR MISDELIVERY 1. Loss or destruction of the goods without the fault of the bailee

Prepared By: C.E.V.A

2. 3. 4. 5. 6. 7. 8. 9.

Failure to satisfy the bailee’s lien Failure to surrender a negotiable document of title Lack of willingness to sign acknowledgement Delivery to a claimant with better right Where the document of title is attached by a creditor Receipt by the bailee of a request by or on behalf of the person lawfully entitled to a right of property or possession in the goods, not to make such delivery The bailee has information that the delivery about to be made was to one not lawfully entitled to the possession of the goods Attachment/levy of the goods by a creditor where the document is surrendered or its negotiation is enjoined or the document is impounded

IN CASE OF ADVERSE CLAIM, THE BAILEE MAY: 1.

2.

Refuse to deliver the goods to anyone of them until he has had reasonable time to check the validity of the claims. File as action for interpleader and allow the claimants to prove their claims or in case an action is filed against the bailee, he can set up the defense of adverse claims.

WAREHOUSEMAN’S OBLIGATIONS A. Under the WRL 1. Deliver the goods upon a demand made either by the holder of a receipt for the goods or depositor. 2. Obligation to deliver arises only if the demand is accompanied by: a. An offer to satisfy the warehouseman’s lien; b. An offer to surrender the receipt, if negotiable, with such indorsement as may be necessary for the negotiation of the receipt; and c. A readiness and willingness to sign, when the goods are delivered, an acknowledgement that they have been delivered, if such signature is requested by the warehouseman. B.

Under the General Bonded Warehouse Law (Act No. 9893; R.A. 247) 1. Secure a license from the Department of Trade and Industry; 2. File a bond equivalent to 33 ½ % of the market value of maximum quantity of goods to be received for the protection of the depositors; 3. Not discriminate and must open his warehouse to the public; 4. Be liable in the amount equivalent to double the market value of the goods in case of damage to the goods because the warehouseman accepts goods in excess of the capacity of his warehouse; and 5. Insure the goods against fire.

LIABILITY OF WAREHOUSEMAN FOR STOLEN AND DEPOSITED GOODS If stolen goods are deposited by the thief with a warehouseman, the latter shall not be liable to the holder of the receipt even if he delivers the goods to the real owners without the receipt being surrendered to him. (Sec.11 and 141, WRL) WAREHOUSEMAN’S LIEN A warehouseman shall have a lien on the goods deposited or on the proceeds thereof in his hands for: 1. All lawful charges for storage and preservation of the goods; 2. All lawful claims for money advanced, interest, insurance, transportation, labor, weighing, coopering,

3.

and other charges and expenses in relation to such goods; and All reasonable charges and expenses for notice and advertisements of sale, and for the sale of the goods where default had been made in satisfying the warehouseman’s lien.

REMEDIES OF A WAREHOUSEMAN TO ENFORCE HIS LIEN 1. Refuse to deliver the goods until his lien is satisfied (Sec. 31, WRL); 2. Sell the goods and apply the proceeds thereof to the value of the lien (Sections 33 & 34, WRL); 3. By other means allowed by law to a creditor against his debtor (Sec. 32, WRL); 4. Such other remedies allowed by law for the enforcement of a lien against personal property (Sec. 35, WRL). LOSS OF LIEN Warehouseman’s lien is lost either by: 1. Surrendering possession thereof; or 2. Refusing to deliver the goods when a demand is made with which he is bound to comply (Sec. 29, WRL). Note: When warehouseman withholds the delivery of the

goods without any valid reason, he is liable for the loss of the goods and the liability cannot be eliminated by proof of exercise of due diligence. ATTACHMENT OR LEVY  Negotiable receipt – the goods cannot be attached/levied in execution unless: 1. The receipt is first surrendered 2. Its negotiation is enjoined 3. The receipt is impounded by the court (Sec. 25, WRL) 



Creditor's Remedies To Reach Negotiable Receipt: A creditor whose debtor is owner of a negotiable warehouse receipt may seek for the attachment of the receipt or seek aid from the courts to compel the debtor to satisfy claims by means allowed by law in regard to property which cannot readily be attached or levied upon by ordinary legal process. (Sec. 26, WRL)

It does not apply when: 1. The depositor is not the owner of the goods (thief) or one who has no right to convey title to the goods binding upon the owner; 2. The action for recovery or manual delivery of goods by the real owner; 3. Where attachment is made prior to the issuance of receipt. Non-negotiable – the goods can be attached, provided it is done prior to the notification of the bailee of the transfer. (Sec. 42, WRL)

WARRANTIES OF TRANSFEROR A person who, for value, negotiates or transfers a receipt by indorsement or delivery, including one who assigns for value a claim secured by a receipt, unless a contrary intention appears, warrants that: 1. The receipt is genuine; 2. He has a legal right to negotiate or transfer it; 3. He has knowledge of no fact which would impair the validity or worth of that receipt; 4. He has a right to transfer the title to the goods; and 5. The goods are merchantable or fit for a particular purpose whenever such warranties would have been implied, if the contract of the parties had been to

Prepared By: C.E.V.A

transfer without a receipt of the goods represented thereby. (Sec. 44, WRL)

REVIEW QUESTIONS1 BQ (1999) A Warehouse Company received for safekeeping 1,000 bags of rice from a merchant. To evidence the transaction, the Warehouse Company issued a receipt expressly providing that the goods be delivered to the order of said merchant. A month after, a creditor obtained judgment against said merchant for a sum of money. The sheriff proceeded to levy on the rice and directed the Warehouse Company to deliver to him the deposited rice. Q1:What advice will you give the Warehouse Company. Explain your answer. Q2:Assuming that a week prior to the levy, the receiptwas sold to a rice mill on the basis of which it filed a claim with the sherill. Would the rice mill have better rights to the rice than the creditor? A1: The 1,000 bags of rice were delivered to the Warehouse Company by a merchant, and a negotiable receipt was issued therefor. The rice cannot thereafter, while in the possession of the Warehouse Company, be attached by garnishment or otherwise, or be levied upon under an execution unless the receipt be first surrendered to the warehouseman, or its negotiation enjoined. The Warehouse Company cannot be compelled to deliver the actual possession of the rice until the receipt is surrendered to it or impounded by the court. A2: Yes. The rice mill, as holder for value of the receipt, has a better right to the rice than the creditor. It is the rice mill that can surrender the receipt which is in its possession and can comply with the other requirements which will oblige the warehouseman to deliver the rice, namely, to sign a receipt for the delivery of the rice, and to pay the warehouseman’s liens and fees and other charges. ***** BQ (2005) Jojo deposited several cartons of goods with SN Warehouse Corporation. The corresponding warehouse receipt was issued to the order of Jojo. He endorsed the warehouse receipt to EJ who paid the value of the goods deposited. Before EJ could withdraw the goods, Melchor informed SN Warehouse Corporation that the goods belonged to him snd were taken by Jojo without his consent. Melchor wants to get the goods, but EJ also wants to withdraw the same. Q1: Who has a better right to the goods? Why? Q2: If SN Warehouse Corporation is uncertain as to who is entitled to the property, what is the proper recourse of the corporation? Explain. A1: EJ has better right to the goods. The goods are covered by a negotiable warehouse receipt which was indorsed to EJ for value. The negotiation to EJ was not impaired by the fact that Jojo took the goods without the consent of Melchar, as EJ had no notice of such fact. Moreover, EJ is in possession of the warehouse receipt and only he can surrender it to the warehouseman. (Sec. 8, WRL) A2: Since there are conflicting claims of ownership of title, SN Warehouse Corporation should file a complaint in interpleader. The matter involves a judicial question as to whose claim is valid.

BQ (2007) Alex deposited goods for which Billy, a warehouseman, issued a negotiable warehouse receipt wherein the goods were delivered to Alex or order. Alex negotiated the receipt to Caloy. Thereafter, Dario, a creditor, secured judgment against Alex and served notice of levy over the goods on the warehouseman. Q1: To whom should the warehouseman deliver the goods upon demand? Q2: Would your answer be the same if the warehouseman issued a non-negotiable warehouse receipt? Reason briefly. A1: The warehouseman should deliver the goods to Caloy. The goods cannot be attached by garnishment or otherwise, or levied upon, unless the receipt be first surrendered to the warehouseman, or its negotiation is enjoined. (Sec. 25, WRL) A2: No. The non-negotiable warehouse receipt does not confer upon the transferee the direct obligation of the warehouseman to hold possession of the goods for him. (Sec, 42, WRL). In such a case, the law provides that when a non-negotiable warehouse receipt is transferred to Caloy, he only gets such title to the goods as alex had and aso a right to notify the warehouseman to hold the goods for Caloy’s account. Prior to such notice, Caloy’s claim can be defeated by a levy of execution upon the goods by a creditor of Alex.

3.

I.

***** Q: Coco was issued by a warehouseman a negotiable receipt for safekeeping by the latter of his goods. Can the judgment creditor of Coco levy by execution the goods covered by the negotiable receipt? A: The goods cannot, while in the possession of the warehouseman, be attached by garnishment or otherwise, or be levied upon under an execution unless the receipt be first surrendered to the warehouseman, or its negotiation enjoined. The warehouseman cannot be compelled to deliver the actual possession of the goods until the receipt is surrendered to it or impounded by the court. ***** Q. X deposits his goods in Y's warehouse, for which Y issues Warehouse receipt No. 00021 which stated that the goods received will be delivered to the bearer or to the order of any person named in such receipt. 1. Suppose X negotiates the warehouse receipt to Z, can Z convert the receipt to a non-negotiable warehousr receipt by writing on its face the word "non-negotiable"? A: No. Z cannot conver the receipt in that manner. According to Section 5 of the WRL, a negotiable warehouse receipt cannot be converted into a non-negotiable warehouse receipt by inserting any provision in the negotiable receipt that it is nonnegotiable. 2. X negotiates the warehouse receipt to M. M, in claiming the goods covered by the receipt, does not bring with him the receipt, but simply makes an oral demand on Y and nothing more. Can Y validly refuse to deliverthe goods? Explain. A: Yes, Y can validly refuse to deliver the goods. The warehouseman is bound to deliver the goods upon demand either by the holder of a receipt for the goods or by the depositor, provided that such demand is accompanied by: a. b. c.

an offer to satisfy the warehouseman ‘lien; an offer to surrender the receipt if it is negotiable, and a readiness and willingness to sign an acknowledgement, when the goods are delivered, that they have been dleivered if such is requested by the warehouseman.

Prepared By: C.E.V.A

Suppose instead of claiming the goods himself, M indorses the receipt in blank to N. O, sees this and waits for an opportunity to steal the receipt. O succeeds and got to Y, demanding the goods. A few minutes before, however, Y was informed that Warehouse Receipt No. 00021 had been stolen. Should Y deliver the goods to O? Explain. A: No. Y should not deliver the goods to O. If Y were to deliver the goods to O, Y could be liable for misdelivery under Sec. 10, WRL, as Y had information that the delivery about to be made was to one not lawfully entitled to the possession of the goods. Y, being aware of the theft, is justified in refusing delivery to O.

Nature and Function2 1. One of these statements is not correct: a) A warehouse receipt serves as proof of possession of the warehouseman of the goods described in it and as authorization for the possessor of the warehouse receipt to transfer or receive the goods described in it. b) A non-negotiable receipt is one in which it is stated that the goods received will be delivered to the depositor or to any other specified person. c) A negotiable receipt is a receipt in which it is stated that the goods received will be delivered to the bearer or to the order of any person named in the receipt. d) A warehouse receipt is not a document of title 2. One of these statements is not correct: a) When a negotiable instrument is altered, it becomes null and void. When a negotiable warehouse receipt is altered, it is still valid but may be enforced only in accordance with its original tenor. b) A negotiable instrument which is originally payable to bearer remains so payable even if it is indorsed specially. A negotiable receipt deliverable to bearer if indorsed specially becomes deliverable to order. c) The holder in due course of a negotiable instrument may be able to obtain a title better than that of the indorser. An indorsee of a negotiable receipt acquires only such title as the person who negotiated had over the goods even if he is a holder in due course. d) Both in a negotiable instrument and in a negotiable receipt the indorser warrants that all prior parties had capacity to contract.

II.

Duties of Warehouseman A. Delivery of Goods 1. One of these is not required to bind the warehouseman to deliver the goods: a) An offer to satisfy his lien. b) An offer to surrender the receipt, if it is negotiable, with indorsements necessary for its negotiation. c) A readiness and willingness to sign upon delivery of the goods, an acknowledgment that they have been received, if the warehouseman requests it. d) An undertaking to hold the warehouseman harmless from claims of third parties. 2. A warehouseman is not justified in delivering the goods to one of the following: a) The person lawfully entitled to the possession of the goods or his agent.

b) c)

d)

A person entitled to the delivery by the terms of the non-negotiable receipt for goods or has written authority from such person. A person in possession of a negotiable receipt for goods deliverable to him or his order or to bearer, which has been indorsed to him or in blank by the person to whom delivery was promised or by his indorsee. The pledgee of the goods covered by the receipt.

lawful charges for storage and preservation of the goods, for all lawful claims in relation to the goods, for all reasonable charges and expenses for notice and advertisement for sale, and for sale of the goods. b) If the receipt is negotiable, the warehouseman will have no lien on the goods except charges for storage, unless the receipt expressly enumerates other charges for which a lien is claimed. c) A warehouseman has a lien against all goods belonging to the person liable for the claims with respect to which a lien is asserted. d) A warehouseman cannot have a lien against the goods if the depositor was merely entrusted with its possession, even if the warehouseman acted in good faith and for value.

3. One of these statements is not correct: a) The general rule is that a warehouseman cannot invoke the right or title of a third person as an excuse for not delivering the goods covered by a receipt. b) By way of exception, the warehouseman may withhold delivery until he has had reasonable opportunity to ascertain the validity of the claim of the third party or to file an action for interpleader. c) If the goods were lawfully sold to satisfy the lien of the warehouseman or were lawfully sold or disposed of because of their perishable or hazardous nature, the warehouseman is not liable for not delivering them. d) If the warehouse receipt was fraudulently altered, the warehouseman will be discharged from liability to deliver the goods. 4. One of these statements is not correct: a) A warehouseman cannot set up title in himself as an excuse for refusing to deliver the goods unless the title is directly or indirectly from a transfer by the depositor or from enforcement of his lien. b) If a warehouseman delivers goods covered by a warehouse receipt and does not take up and cancel it, he will be liable to anyone who purchases the warehouse receipt in good faith and for value. c) If a warehouseman delivers a part of the goods for which he issued a negotiable receipt and did not take up and cancel the receipt or state plainly upon it what goods were delivered, he will be liable to anyone who purchased the receipt in good faith and for value. d) A warehouseman is not liable to the holder of a receipt if the goods do not correspond with the description in it.

Enforcement of Warehouseman’s Lien 1. One of these statements is not correct: a) A warehouseman’s lien may be satisfied by selling the goods. b) The warehouseman must give the person for whose account he is holding the goods or any other person he knows to claim an interest in the goods notice to pay within ten days. c) If the warehouseman is not paid, an advertisement of the sale must be published once a week for three consecutive weeks in a newspaper published in the place of the sale. d) The sale cannot be made less than 15 days before the date of the first publication. 2. One of these statements is not correct: a) If there is no newspaper published in the place of the sale, the advertisement must be posted at least 10 days before the sale in six conspicuous places. b) A sale held without complying with the publication and before the prescribed time is void. c) In case of deficiency in the proceeds of the sale, the warehouseman cannot sue for the deficiency. d) If the proceeds of the sale exceed the amount due the warehouseman, the excess shall be delivered to the person entitled to the delivery of the goods.

Safekeeping of the Goods 1. One of these statements is not correct: a) A warehouseman is liable for any loss or injury to the goods caused by his failure to exercise such care as a reasonably careful owner would exercise. b) In the absence of a stipulation to the contrary, the warehouseman is not liable for any loss or injury to the goods which could not have been avoided by exercise of such care. c) A warehouseman is not liable for loss due to a fortuitous event. d) The person claiming the goods has the burden of proving the loss was due to the fault of the warehouseman.

Negotiation and Transfer of Warehouse Receipts A. Negotiation 1. One of these statements is not correct: a) A negotiable receipt may be negotiated by delivery if by its terms the goods are deliverable to the bearer or by its terms the goods are deliverable to the order of a specified person and he or a subsequent indorsee indorsed the receipt in blank or to bearer. b) If the goods are deliverable to bearer or the negotiable receipt was indorsed in blank or to bearer, even if the holder indorsed it to himself or a specified person, the receipt can be negotiated further by delivery. c) The warrant of a negotiable receipt by the person to whose order the goods are deliverable may be in blank, to bearer, or to a specified person. d) Subsequent negotiations may be made in the same manner.

Warehouseman’s Lien A. Claims Included and Properties Covered 1. One of these statements is not correct: a) A warehouseman has a lien on the goods deposited or their proceeds in his hands for all

2. One of these statements is not correct: a) A negotiable receipt may be negotiated by the owner. b) If by the terms of a negotiable receipt, the goods are deliverable to the order of the person

B.

III.

B.

Prepared By: C.E.V.A

IV.

c)

d)

to whose possession the owner of the receipt entrusted it, such person cannot negotiate the receipt. A person to whom a negotiable receipt was negotiated acquires such title to the goods as the person negotiating had ability to convey to a buyer in good faith and for value. A person to whom a negotiable receipt was negotiated acquires the direct obligation of the warehouseman to hold the goods for him.

3. One of these statements is not correct: a) The negotiation of a negotiable receipt is not impaired by the fact that it was a breach of duty of the person negotiating it or that the owner of the receipt was induced by fraud, mistake or duress to entrust the receipt to such person if the person to whom it was negotiated took it in good faith and for value. b) If a person who sold goods covered by a negotiable receipt remained in possession of it, the negotiation of the receipt to a person who took it in good faith and for value has the same effect as if the first buyer had authorized the negotiation. c) A seller’s lien or right of stoppage in transitu will defeat the rights of a buyer in good faith and for value to whom the receipt was negotiated. d) If a warehouseman who sold sugar covered by a negotiable receipt was not paid by the buyer, the negotiation of the receipt by the buyer is valid. B.

Transfer of Rights 1. One of these statements is not correct: a) A non-negotiable receipt may not be transferred by delivery. b) The negotiation of a non-negotiable receipt does not give the transferee any additional right. c) A person to whom a non-negotiable receipt was transferred acquires as against the transferor title to the goods subject to their agreement. d) A person to whom a non-negotiable receipt was transferred acquires the right to notify the warehouseman of the transfer to him and to acquire the direct obligation of the warehouseman to hold the goods for him. 2. One of these statements is not correct: a)

b)

c)

d)

Before the notification to the warehouseman, the title of the transferee to the goods maybe defeated by a levy upon them by a creditor of the goods. Before the notification to the warehouseman, the title of the transferee to the goods may be defeated by a notification to the warehouseman of a subsequent sale of the goods. If a negotiable receipt is transferred for value by delivery and indorsement is necessary for its negotiation, the transferee can compel the transferor to indorse it. The effect of the negotiation will retroact to the date of the transfer of the receipt.

DEFINITION OF TERMS3 "action" includes counterclaim and set-off; "fungible goods" means goods of which any unit is, from its nature or by mercantile custom, treated as the equivalent of any other unit; "goods" includes all chattels personal other than things in action and money; "holder", as applied to a negotiable receipt, means a person who has possession of the receipt and a right of property therein, and, as applied to a non-negotiable receipt, means a person named therein as the person to whom the goods are to the delivered or his transferee; "negotiable receipt" means a receipt in which it is stated that the goods therein specified will be delivered to bearer or to the order of a named person; "non-negotiable receipt" means a receipt in which it is stated that the goods therein specified will be delivered to the holder thereof; "purchase" includes to take as mortgagee or as pledgee; "purchaser" includes mortgagee and pledgee; "receipt" means a warehouse receipt; "warehouse receipt" means an acknowledgment in writing by a warehouseman of the receipt for a storage of goods not his own; "warehouseman" means a person who received goods for storage for reward. R.S., c. 333, s. 1.

1. “The Warehouse Receipts Law”. Retreived: Dec 14,2013 from http://credittrans.blogspot.com/2012/09/warehouse-recepts-law.html 2. “Bar Reviewer In Mercantile Law”. Retreived: Dec 14,2013 from https://www.google.com.ph/url? sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&ved=0CEEQFjAE&url=ht tp%3A%2F%2Fxa.yimg.com%2Fkq%2Fgroups %2F22047546%2F1652942981%2Fname%2FMercantile %2BLaw.doc&ei=v_SrUpa4B4TYigeLloCYAg&usg=AFQjCNEtmGu_M2_ezlR e_i9KQ-b6fh7YYg&bvm=bv.57967247,d.aGc

3.

“Warehouse Receipts Act”. Retrieved:Dec 14, 2013 from http://nslegislature.ca/legc/statutes/warerec.htm

Prepared By: C.E.V.A