Chapter 23 Legal Aspects of Supply Chain Management

1. Chapter 23Legal Aspects of Supply Chain Management Twomey, Business Law and the Regulatory Environment (14th Ed.)

2. Warehouse Receipts [23-1] Nonnegotiable Negotiable To whom goods are delivered as stated on receipt Deliver to the bearer Or Deliver to the order of John Doe Deliver to Jane Doe Purposes of receipt 1. Contract for storage 1. Contract for storage 2. Receipt for goods 2. Receipt for goods 3. Document of title 3. Document of title Yes—If receipt says, “Deliver to the order of John Doe,” it must be indorsed by John Doe for holder of receipt to receive goods Is receipt required for delivery of goods? Yes Chapter 23

3. Due Negotiation of Warehouse Receipt[23-2] SELLER (Depositor) (Bailee) WAREHOUSER (Issuer) (Bailee) GOODS WAREHOUSE RECEIPT WAREHOUSE RECEIPT BUYER Indorsement and delivery value/good faith due negotiation right to goods PURCHASER OF WAREHOUSE RECEIPT Once purchaser has duly negotiated receipt, seller can’t take back the goods. Purchaser of duly negotiated warehouse receipt takes priority over bfps and original owner. or right to negotiate further Chapter 23

4. Common Carriers[23-3] Consignee: Receives shipped goods Consignor: Delivers goods to the carrier Carrier: Transports goods Common Carrier: transports goods of general public without discrimination Contract Carrier: transports goods under individual contracts Private Carrier: only transports its company’s own goods Chapter 23

5. Chapter 23 Summary 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. The 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. Chapter 23

6. Chapter 23 Summary [2] A negotiable warehouse receipt states that the goods will be delivered “to the bearer” or “to the order of ” a named person. If a negotiable warehouse receipt is duly negotiated, the transferee may acquire rights superior to those of the transferor. Chapter 23

7. Chapter 23 Summary [3] 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 warehouse receipt provided the depositor is given the right to store the goods without the limitation at a higher storage rate. Chapter 23

8. Chapter 23 Summary [4] A common carrier of goods is in the business of transporting goods received from the general public. It issues to the shipper a bill of lading or an airbill. Both of these are documents of title and provide rights similar to those provided by a warehouse receipt. Chapter 23

9. Chapter 23 Summary [5] A common carrier is absolutely liable for any loss or damage to the goods unless the carrier can show that 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. The carrier may limit its liability in the same manner as a warehouser. Chapter 23

10. Chapter 23 Summary [6] A factor is a special type of bailee who has possession of the owner’s property for the purpose of sale. The factor, or consignee, receives a commission on the sale. Chapter 23

11. Chapter 23 Summary [7] A hotelkeeper is in the business of providing living 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. Chapter 23