Storage Agreement Clauses That Protect Your Goods

A storage agreement is often signed on a ready-made form supplied by the warehouse and read in a hurry, because the goods are on their way and the truck is at the door. Then a loss occurs, and the questions appear that should have been settled from the start: whose goods are these? Who authorised their release? Who pays? Can the owner take them back today? This article lists topics to raise when negotiating the contract. It is not legal advice: the wording of clauses, their enforceability, the governing law and the forum for disputes are matters for your legal adviser, who knows the local law.

Ownership and separation of goods

Ask first: does the contract state that ownership stays with you for the whole period of storage? Is the warehouse forbidden to pledge the goods, dispose of them or transfer them to anyone else? How are your goods kept apart from other people's? Mixed storage lets an operator cover a shortage with goods belonging to another client, and it makes any later count harder. Ask for your goods to be marked with your name or a clear code. And ask your adviser whether the warehouse may hold goods back against unpaid fees, and how that right is limited. State also the address of the warehouse where the goods are kept, and provide that they may move to another site only with your written consent; a transfer between warehouses without your knowledge disrupts any count and can change the insurance position.

The right to inspect, count and receive reports

Write into the contract your right to inspect and count the goods, yourself or through someone you authorise, after reasonable notice stated in days. Set how often routine counts take place and your right to ask for an extra one when in doubt. Provide for photography, for your access to the warehouse records that relate to your goods, and for the operator to cooperate with the independent party you appoint. This clause turns oversight into a contractual right and not a courtesy.

Alongside inspection, define the form, frequency and timing of the stock statement, and how long records and receiving and dispatch documents are kept. Agree to be told of any incident, such as fire, theft or a failure of refrigeration, within a stated number of hours, with camera footage made available when needed. If the operator may use subcontractors for guarding or transport, that should be declared and the operator should remain responsible for them.

Release procedure

Release is the most sensitive point. Require that goods are released only on a written order from persons named individually, that the list of authorised signatories and their specimen signatures form an annex to the contract, and that the list changes only by a letter from you. Ask that each release be accompanied by a defined document signed by the recipient, and that a large release need a further confirmation from you. That way nobody carrying a convincing piece of paper can take your goods.

Liability and insurance

Read exactly what the warehouse accepts for loss and damage, and any ceiling on compensation. Compare that ceiling with the real value of your goods. Suppose the contract limits liability to 20,000 dollars and your goods are worth 400,000 dollars. If 10 percent of them were lost, which is 40,000 dollars, the maximum compensation would cover only half of the loss. Ask who insures the goods, with whom, and whether your name appears on the policy. Ask what notice period applies for reporting an incident, and which stock records the insurer accepts as evidence. Ask what the contract excludes from liability, such as force majeure, and how that term is defined.

Exit and termination

The worst time to find a gap in the contract is at the moment of exit. So agree in advance the notice period, a time to remove the goods, for example 30 days, a joint count at handover signed by both sides, and what happens if a fee dispute arises meanwhile: are the goods held, or released against a guarantee? Say too that your right of inspection continues throughout the removal period. Details like these are settled only by written text.

In short

These topics are raised first and worded afterwards by specialists: ownership, inspection, release, liability, reporting and exit. WarehouseDepo does not draft contracts or give legal advice, but it exercises the right of inspection that you write in: it counts the goods on site, photographs them, sets them against the operator's statements and writes up what it found.