This article offers an introductory review of the concept of warehouseman's legal liability. The legal basis of a warehouseman's liability to those who have items stored in the warehouse is noted, as well as those causes of loss that are the primary exposure to loss for the customers' property. Different insurance policies that address a warehouseman's liability are also discussed.

Topics covered: Legal basis of liability Causes of loss Insurance coverages

Legal Basis of Liability

A warehouseman is defined in Black's Law Dictionary as “one engaged in the business of receiving and storing goods of others for compensation or profit”. The warehouseman agrees to take and safely store another's property in exchange for compensation. This contractual business arrangement requires a duty of care on the part of a warehouseman to his or her customers to prevent loss or damage to the stored property. And, since the arrangement is a contractual one dealing with goods, the basis of liability for the warehouseman is the Uniform Commercial Code (UCC).

Section 7-204 of the UCC deals with the duty of care owed by a warehouseman. That section states that “a warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unless otherwise agreed, he is not liable for damages which could not have been avoided by the exercise of such care”. In other words, the warehouseman owes a reasonable man standard of care to his customers; for example, a reasonable man would have the warehouse locked and well lit at night to cut down on the threat of theft, and if these actions are not taken, the warehouseman would be liable for a theft loss. On the other hand, a reasonable man would not expect an airplane to crash into the warehouse, so unless the storage contract addresses such an exposure, the warehouseman would not be liable for damage caused by a falling airplane.