Warehouse receipt definition

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What is a Warehouse Receipt?

A warehouse receipt is a document on which are itemized the goods stored in a warehouse. Warehouse receipts are commonly used to document the storage of many kinds of commodities, which are sold on the futures market. The receipt also attests to the quality of the stored goods, which is a requirement of futures contracts.

A warehouse receipt represents title to the goods. Warehouse receipts can be used to sell goods without having to deliver them. Instead, the new owner continues to store the goods in the warehouse. There are two types of warehouse receipt, which are noted below:

  • Negotiable warehouse receipt. A negotiable warehouse receipt specifies that the goods are deliverable to the bearer of the document, which means that they can be used as collateral for loans. If the borrower defaults, the lender takes over the warehouse receipt and can sell the goods to obtain payment of the loan.

  • Non-negotiable warehouse receipt. A non-negotiable warehouse receipt specifies to whom the goods shall be delivered.

Characteristics of a Warehouse Receipt

The key characteristics of a warehouse receipt are as follows:

  • Legal document. A warehouse receipt is a legal acknowledgment that the goods are stored in a warehouse. It can be used in disputes to prove ownership or the quantity and condition of goods stored.

  • Itemization of goods. A warehouse receipt describes the type, quantity, and quality of goods stored. It may also include details such as weight, dimensions, grade, or specific identification (e.g., lot numbers).

  • Indicates ownership. A warehouse receipt indicates the owner of the goods stored or the person entitled to take delivery.

  • Description of storage terms. A warehouse receipt states the duration of storage, storage fees, insurance details, and any related issues.

  • Acknowledgment of goods. A warehouse receipt confirms that the warehouse has received the goods for safekeeping.

  • Conditions of delivery. A warehouse receipt states the terms under which the goods can be released.

  • Legal provisions. A warehouse receipt includes clauses limiting the liability of the warehouse operator in certain cases, such as damage due to force majeure.