Section § 7201

Explanation

This law states that any warehouse can issue a warehouse receipt, which is a document proving that goods are stored there. Additionally, if goods like distilled spirits or agricultural products are kept under special rules that require a bond or license, anyone issuing a receipt for those goods—whether or not they own them or are a warehouse—is considered to be issuing a proper warehouse receipt.

(a)CA Commercial Law Code § 7201(a) A warehouse receipt may be issued by any warehouse.
(b)CA Commercial Law Code § 7201(b) If 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 is deemed to be a warehouse receipt even if issued by a person that is the owner of the goods and is not a warehouse.

Section § 7202

Explanation

This law section talks about what's needed in a warehouse receipt, which is a document detailing goods stored in a warehouse. The receipt doesn't need to follow a specific template, but it must include certain details to avoid making the warehouse responsible for any harm caused by leaving them out. These details include the warehouse's location, issue date, a unique ID, who the goods are for, storage fees, a description of the goods, the warehouse's signature, any ownership by the warehouse, and a statement on any liens or claims about the goods. Warehouses can add extra terms to the receipt as long as they don't conflict with specific legal duties.

(a)CA Commercial Law Code § 7202(a) A warehouse receipt need not be in any particular form.
(b)CA Commercial Law Code § 7202(b) Unless a warehouse receipt provides for each of the following, the warehouse is liable for damages caused to a person injured by its omission:
(1)CA Commercial Law Code § 7202(b)(1) a statement of the location of the warehouse facility where the goods are stored;
(2)CA Commercial Law Code § 7202(b)(2) the date of issue of the receipt;
(3)CA Commercial Law Code § 7202(b)(3) the unique identification code of the receipt;
(4)CA Commercial Law Code § 7202(b)(4) a statement whether the goods received will be delivered to the bearer, to a named person, or to a named person or its order;
(5)CA Commercial Law Code § 7202(b)(5) the rate of storage and handling charges, unless goods are stored under a field warehousing arrangement, in which case a statement of that fact is sufficient on a nonnegotiable receipt;
(6)CA Commercial Law Code § 7202(b)(6) a description of the goods or the packages containing them;
(7)CA Commercial Law Code § 7202(b)(7) the signature of the warehouse or its agent;
(8)CA Commercial Law Code § 7202(b)(8) if the receipt is issued for goods that the warehouse owns, either solely, jointly, or in common with others, a statement of the fact of that ownership; and
(9)CA Commercial Law Code § 7202(b)(9) a statement of the amount of advances made and of liabilities incurred for which the warehouse claims a lien or security interest, unless the precise amount of advances made or liabilities incurred, at the time of the issue of the receipt, is unknown to the warehouse or to its agent that issued the receipt, in which case a statement of the fact that advances have been made or liabilities incurred and the purpose of the advances or liabilities is sufficient.
(c)CA Commercial Law Code § 7202(c) A warehouse may insert in its receipt any terms that are not contrary to the provisions of this code and do not impair its obligation of delivery under Section 7403 or its duty of care under Section 7204. Any contrary provision is ineffective.

Section § 7203

Explanation

If you're buying or relying on a document that describes goods, like a receipt or title, and the goods are not as described, you can get damages from whoever issued that document. However, you can't claim damages if the document clearly states that the issuer does not really know if the goods were received or match the description, or if you already knew about the problem when you bought it.

A party to or purchaser for value in good faith of a document of title, other than a bill of lading, that relies upon the description of the goods in the document may recover from the issuer damages caused by the nonreceipt or misdescription of the goods, except to the extent that:
(1)CA Commercial Law Code § 7203(1) the document conspicuously indicates that the issuer does not know whether all or part of the goods in fact were received or conform to the description, such as a case in which 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 words of similar import, if the indication is true; or
(2)CA Commercial Law Code § 7203(2) the party or purchaser otherwise has notice of the nonreceipt or misdescription.

Section § 7204

Explanation

This law outlines the responsibilities of a warehouse in caring for goods. Warehouses must exercise the same care a careful person would in similar situations to prevent loss or damage. If a warehouse fails to do so, it is liable. However, a warehouse can limit its liability through the storage agreement, except in cases where it misuses the goods for itself. Additionally, warehouses can agree to higher liability limits if requested by the goods owner, which may result in higher fees. The law also allows for terms on how and when claims can be made in the agreement, but it does not change other specific laws like those in the Civil Code or regulations related to utilities and agriculture.

(a)CA Commercial Law Code § 7204(a) A warehouse is liable for damages for loss of or injury to the goods caused by its failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances. Unless otherwise agreed, the warehouse is not liable for damages that could not have been avoided by the exercise of that care.
(b)CA Commercial Law Code § 7204(b) 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 beyond which the warehouse is not liable. Such a limitation is not effective with respect to the warehouse’s liability for conversion to its own use. On request of the bailor in a record at the time of signing the storage agreement or within a reasonable time after receipt of the warehouse receipt, the warehouse’s liability may be increased on part or all of the goods covered by the storage agreement or the warehouse receipt. In this event, increased rates may be charged based on an increased valuation of the goods.
(c)CA Commercial Law Code § 7204(c) Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the bailment may be included in the warehouse receipt or storage agreement.
(d)CA Commercial Law Code § 7204(d) This section does not modify or repeal Section 1630 of the Civil Code nor any of the provisions of the Public Utilities Code or the Food and Agricultural Code or any lawful regulations issued thereunder.

Section § 7205

Explanation

If you buy goods like grains or oil from a warehouse that regularly sells those types of goods, you own them outright, even if someone else holds a legal document claiming ownership of those goods.

A buyer in ordinary course of business of fungible goods sold and delivered by a warehouse that is also in the business of buying and selling such goods takes the goods free of any claim under a warehouse receipt even if the receipt is negotiable and has been duly negotiated.

Section § 7206

Explanation

If you store your goods in a warehouse, the warehouse can ask you to pick them up and pay any storage fees once the storage period ends. If you don't pick them up, they might be sold. If the goods could spoil or drop in value quickly, the warehouse can shorten the deadline for pickup and sell them sooner. Dangerous goods can be sold or disposed of without notice if they weren’t aware of the risk when stored. Before selling, you can claim your goods by making a demand. Any leftover money from selling your goods after the warehouse covers its costs will be yours to claim.

(a)CA Commercial Law Code § 7206(a) A warehouse, by giving notice to the person on whose account the goods are held and any other person known to claim an interest in the goods, may 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 of title or, if a period is not fixed, within a stated period not less than 30 days after the warehouse gives notice. If the goods are not removed before the date specified in the notice, the warehouse may sell them pursuant to Section 7210.
(b)CA Commercial Law Code § 7206(b) If a warehouse in good faith believes that goods are about to deteriorate or decline in value to less than the amount of its lien within the time provided in subdivision (a) and Section 7210, the warehouse may specify in the notice given under subdivision (a) any reasonable shorter time for removal of the goods and, if the goods are not removed, may sell them at public sale held not less than one week after a single advertisement or posting.
(c)CA Commercial Law Code § 7206(c) If, as a result of a quality or condition of the goods of which the warehouse did not have notice at the time of deposit, the goods are a hazard to other property, the warehouse facilities, or other persons, the warehouse may sell the goods at public or private sale without advertisement or posting on reasonable notification to all persons known to claim an interest in the goods. If the warehouse, after a reasonable effort, is unable to sell the goods, it may dispose of them in any lawful manner and does not incur liability by reason of that disposition.
(d)CA Commercial Law Code § 7206(d) A warehouse shall deliver the goods to any person entitled to them under this division upon due demand made at any time before sale or other disposition under this section.
(e)CA Commercial Law Code § 7206(e) A warehouse may satisfy its lien from the proceeds of any sale or disposition under this section but shall hold the balance for delivery on the demand of any person to which the warehouse would have been bound to deliver the goods.

Section § 7207

Explanation

This law says that a warehouse must keep each customer's goods separate so they can be easily identified and delivered, unless the goods are fungible, meaning they are interchangeable like grains or oil. Fungible goods can be mixed together, and if they are, they belong to everyone with a claim, and the warehouse is responsible for each person's share. If there aren't enough goods to match the receipts issued, everyone with a legitimate receipt, including those with receipts issued by mistake, has a right to their share.

(a)CA Commercial Law Code § 7207(a) Unless the warehouse receipt provides otherwise, a warehouse shall keep separate the goods covered by each receipt so as to permit at all times identification and delivery of those goods. However, different lots of fungible goods may be commingled.
(b)CA Commercial Law Code § 7207(b) If different lots of fungible goods are commingled, the goods are owned in common by the persons entitled thereto and the warehouse is severally liable to each owner for that owner’s share. If, because of overissue, a mass of fungible goods is insufficient to meet all the receipts the warehouse has issued against it, the persons entitled include all holders to which overissued receipts have been duly negotiated.

Section § 7208

Explanation

If someone fills in a blank on a paper warehouse receipt without permission, a buyer who purchases it in good faith and doesn't know about this issue can assume it's correct. Otherwise, any changes made without permission won't affect what was originally agreed upon in the receipt, whether it's electronic or paper, and the issuer has to stick to the original terms.

If a blank in a negotiable tangible warehouse receipt has been filled in without authority, a good-faith purchaser for value and without notice of the lack of authority may treat the insertion as authorized. Any other unauthorized alteration leaves any tangible or electronic warehouse receipt enforceable against the issuer according to its original tenor.

Section § 7209

Explanation

This law gives warehouses a right, called a lien, on the goods they store. It's like a claim to make sure they get paid for things like storage, transport, or selling the goods if needed. The lien also applies to charges relating to other items stored in the same warehouse, as long as it's stated in a storage agreement or receipt. For some charges, the warehouse can claim a special kind of interest called a security interest, which is like additional protection for getting paid. If goods are given to the warehouse with the owner's permission, the lien still holds even if the owner pledged the goods to someone else. But if the person with the goods didn't have the right to pledge them, the lien won’t apply to previous owners who didn't know about it. Special rules apply to household goods, which are things like furniture and items used at home. Importantly, if the warehouse gives the goods back or unjustly refuses to return them, they lose their lien.

(a)CA Commercial Law Code § 7209(a) A warehouse has a lien against the bailor on the goods covered by a warehouse receipt or storage agreement or on the proceeds thereof in its possession for charges for storage or transportation, including demurrage and terminal charges, insurance, labor, or other 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 similar charges or expenses in relation to other goods whenever deposited and it is stated in the warehouse receipt or storage agreement that a lien is claimed for charges and expenses in relation to other goods, the warehouse also has a lien against the goods covered by the warehouse receipt or storage agreement or on the proceeds thereof in its possession for those charges and expenses, whether or not the other goods have been delivered by the warehouse. However, as against a person to which a negotiable warehouse receipt is duly negotiated, a warehouse’s lien is limited to charges in an amount or at a rate specified in the warehouse receipt or, if no charges are so specified, to a reasonable charge for storage of the specific goods covered by the receipt subsequent to the date of the receipt.
(b)CA Commercial Law Code § 7209(b) A warehouse may also reserve a security interest against the bailor for the maximum amount specified on the receipt for charges other than those specified in subdivision (a), such as for money advanced and interest. The security interest is governed by Division 9 (commencing with Section 9101).
(c)CA Commercial Law Code § 7209(c) A warehouse’s lien for charges and expenses under subdivision (a) or a security interest under subdivision (b) is also effective against any person that so entrusted the bailor with possession of the goods that a pledge of them by the bailor to a good-faith purchaser for value would have been valid. However, the lien or security interest is not effective against a person that before issuance of a document of title had a legal interest or a perfected security interest in the goods and that did not:
(1)CA Commercial Law Code § 7209(c)(1) deliver or entrust the goods or any document of title covering the goods to the bailor or the bailor’s nominee with:
(A)CA Commercial Law Code § 7209(c)(1)(A) actual or apparent authority to ship, store, or sell;
(B)CA Commercial Law Code § 7209(c)(1)(B) power to obtain delivery under Section 7403; or
(C)CA Commercial Law Code § 7209(c)(1)(C) power of disposition under Section 2403 or 9320 or subdivision (c) of Section 9321 or subdivision (b) of Section 10304 or subdivision (b) of Section 10305 or other statute or rule of law; or
(2)CA Commercial Law Code § 7209(c)(2) acquiesce in the procurement by the bailor or its nominee of any document.
(d)CA Commercial Law Code § 7209(d) A warehouse’s lien on household goods for charges and expenses in relation to the goods under subdivision (a) is also effective against all persons if the depositor was the legal possessor of the goods at the time of deposit. In this subdivision, “household goods” means furniture, furnishings, or personal effects used by the depositor in a dwelling.
(e)CA Commercial Law Code § 7209(e) A warehouse loses its lien on any goods that it voluntarily delivers or unjustifiably refuses to deliver.

Section § 7210

Explanation

This law outlines how a warehouse can sell goods to enforce its lien, meaning the right to keep possession of property belonging to another person until a debt owed by that person is discharged. The warehouse must follow specific steps, like notifying anyone with an interest in the goods and selling them in a commercially reasonable way, which usually involves public auction. The notice must detail the amount owed, the sale's time and place, and be sent in various possible ways. If a lien is on goods stored by a merchant for business, extra rules apply, such as advertising the sale with a newspaper announcement or postings if no newspaper is available. Before the sale, anyone can pay off the lien to stop the sale. A good faith buyer gets the goods free of claims, but the warehouse must still fulfill its obligations to others involved. If a warehouse doesn't comply, it may face penalties like damages or, if intentional, conversion claims, which means wrongfully taking control of someone's property. Warehouses can also buy at their public sales.

(a)CA Commercial Law Code § 7210(a) Except as otherwise provided in subdivision (b), a warehouse’s lien may be enforced by public or private sale of the goods, in bulk or in packages, at any time or place and on any terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. Notification may be made by mail, personal service, or verifiable electronic mail. The notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a method different from that selected by the warehouse is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The warehouse sells in a commercially reasonable manner if the warehouse sells the goods in the usual manner in any recognized market therefor, sells at the price current in that market at the time of the sale, or otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence.
(b)CA Commercial Law Code § 7210(b) A warehouse may enforce its lien on goods, other than goods stored by a merchant in the course of its business, only if the following requirements are satisfied:
(1)CA Commercial Law Code § 7210(b)(1) All persons known to claim an interest in the goods must be notified.
(2)CA Commercial Law Code § 7210(b)(2) 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 10 days after receipt of the notification, and 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.
(3)CA Commercial Law Code § 7210(b)(3) The sale must conform to the terms of the notification.
(4)CA Commercial Law Code § 7210(b)(4) The sale must be held at the nearest suitable place to where the goods are held or stored.
(5)CA Commercial Law Code § 7210(b)(5) 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 the goods are being held, and the time and place of the sale. The sale must take place at least 15 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 10 days before the sale in not fewer than six conspicuous places in the neighborhood of the proposed sale.
(c)CA Commercial Law Code § 7210(c) 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 in complying with this section. In that event, the goods may not be sold but must be retained by the warehouse subject to the terms of the receipt and this division.
(d)CA Commercial Law Code § 7210(d) A warehouse may buy at any public sale held pursuant to this section.
(e)CA Commercial Law Code § 7210(e) A purchaser in good faith of goods sold to enforce a warehouse’s lien takes the goods free of any rights of persons against which the lien was valid, despite the warehouse’s noncompliance with this section.
(f)CA Commercial Law Code § 7210(f) A warehouse may satisfy its lien from the proceeds of any sale pursuant to this section but shall hold the balance, if any, for delivery on demand to any person to which the warehouse would have been bound to deliver the goods.
(g)CA Commercial Law Code § 7210(g) The rights provided by this section are in addition to all other rights allowed by law to a creditor against a debtor.
(h)CA Commercial Law Code § 7210(h) If a lien is on goods stored by a merchant in the course of its business, the lien may be enforced in accordance with subdivision (a) or (b).
(i)CA Commercial Law Code § 7210(i) A warehouse 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.