Warehouse receipt definition

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.