For many companies, whether industrial, commercial or agricultural, inventories represent a significant proportion of fixed assets. This dormant capital may be needed to finance the operating cycle, invest or meet unforeseen cash requirements. Physically moving these goods to sell or pledge them is not always possible or desirable. This is precisely where the warehouse receipt comes in, an ingenious legal instrument issued exclusively by approved general shops. This document enables transactions to be carried out on stored goods - sale, pledging - without having to handle them. This solution differs from other legal frameworks such as the collective shop for independent retailers. This article explores in detail what a warrant receipt is, the steps involved in issuing it and, most importantly, the different ways in which it can be used to transfer ownership or secure credit. For a more complete overview, our essential guide to general shops and warehouse receipts is available.
From filing to issuing the warrant receipt
It all starts with depositing goods in an approved general shop. As we saw in our previous article on the general shopIn accordance with article L. 522-1 of the French Commercial Code, this option is available to manufacturers, traders, farmers and craftsmen for their raw materials, goods, commodities or manufactured products. An essential step in the deposit process is the precise declaration of the nature and value of the goods entrusted to us, an obligation for the depositor under article L. 522-14. This declaration is important, particularly for insurance purposes and determining liability.
Once the goods have been accepted by the general shop, the depositor does not automatically receive a warehouse receipt. They can make do with a simple entry slip. This document certifies that the goods have been deposited, but it has no negotiable value and cannot be used to easily transfer rights over the goods. To obtain the precious negotiable document, the depositor must make an express written request to the general shop, as implicitly provided for in article L. 522-25 of the French Commercial Code, which governs the issue of documents.
The receipt-warrant is a formal document whose content is strictly defined by law. Article L. 522-24 of the French Commercial Code lists the compulsory details: name, profession and address of the depositor, nature of the goods, and any information needed to establish their identity (quantity, weight, marks, etc.) and value. Article R. 522-20 adds a crucial statement indicating whether the goods are insured against fire under the shop's general policies. If any of these details are missing, the validity of the document as a warehouse receipt could be called into question. The date of deposit and, of course, the signature of the general shop operator must also be included for the document to be complete.
Article R. 522-21 of the French Commercial Code offers an interesting degree of flexibility: if the goods are suitable, the depositor (or a subsequent holder of the combined titles) may ask to split the initial batch. The general shop will then replace the original title with as many new warehouse receipts as there are batches created. This can facilitate partial sales or pledging.
Understanding the nature of the warehouse receipt
The récépissé-warrant is a single document made up of two distinct parts, physically attached but separable: the récépissé (upper part) and the warrant (lower part). This duality is the key to its functionality. It can be seen as a title deed (the receipt) to which a specific pledge deed (the warrant) can be attached or detached.
Basically, the warehouse receipt is a document of title representing the goods deposited. Legitimate possession of the receipt is legally equivalent to possession of the goods themselves. This is what makes it possible to operate on the goods without moving them.
This is a "promissory note", as specified in article L. 522-28 of the French Commercial Code. This means that they are transferable by endorsement: a signature on the back of the instrument transfers the rights to another person (the endorsee). This negotiability is at the heart of its commercial and financial usefulness.
However, despite its negotiability, the receipt (whether accompanied by the warrant or not) is not considered to be a commercial instrument in the strict sense, such as a bill of exchange or a promissory note. It does not establish a claim to a sum of money but a right over goods. The warrant, when endorsed separately to secure a debt, is closer to the nature of a negotiable instrument, but the receipt-warrant system as a whole falls into its own category of negotiable instruments.
Transfer ownership of goods by endorsement
The simplest way to use the receipt-warrant is to transfer full ownership of the goods stored. This is done by jointly endorsing the receipt and the warrant, i.e. by signing the back of the document without separating the two parts.
To be valid, endorsements must comply with certain formal requirements, as set out in article L. 522-27 of the French Commercial Code: they must be dated and signed by the endorser (the person transferring the instrument). It must be dated and signed by the endorser (the person transferring the instrument). The name and address of the endorsee (the person receiving the instrument) must normally appear on the endorsement. However, endorsements can also be made "in blank", i.e. with the endorser's signature only. In this case, the security circulates by simple physical delivery, like a bearer security, until a holder decides to put his or her name on it.
What is the effect of this endorsement of the two titles together? Article L. 522-28 is clear: it transfers to the endorser the right to dispose of the goods. In practical terms, the purchaser becomes the new owner of the goods stored and can demand that they be delivered to the general shop (by presenting the full title). Legally, this endorsement results in a transfer of possession: the general shop, which held the goods on behalf of the endorser, now holds the goods on behalf of the endorser. An important advantage of this mechanism is the "unenforceability of defences": the purchaser in good faith is protected against certain challenges that could be brought against the former owner.
To ensure that the general shop is fully informed, it is possible to have the endorsement transcribed onto the store's registers. Although not compulsory for the transfer to be valid between the parties, this transcription is recommended because it makes the transfer fully enforceable against the operator, who will then know to whom to hand over the goods when the time comes.
Obtaining credit using the warrant as collateral
The real innovation of the system lies in the possibility of separating the warrant from the receipt and using it as a credit instrument. By endorsing only the warrant to a lender (usually a bank), the depositor creates a pledge over the goods stored. This is a specific form of pledge, very secure for the creditor because the goods are held by a trusted third party (the general shop) and the warrant gives the creditor a direct right to these goods.
The endorsement of the warrant follows its own rules (which are not the main subject here but concern the mention of the secured claim, the due date, etc.). For the owner of the goods, who keeps the receipt, this operation has a major consequence: he remains the owner, but his right is now encumbered by the pledge. Article L. 522-28 specifies that the owner may no longer withdraw the goods without the agreement of the warrant holder (the pledgee) or without having repaid the secured debt.
Fortunately, to prevent the goods from being held up indefinitely, the law offers the bearer of the receipt a way out. Article L. 522-30 allows him to repay the debt secured by the warrant, even before it falls due. If the warrant holder is known to the bank, it can offer to pay. If it does not know the holder or if the creditor refuses, it can deposit the sum due (capital and interest) directly with the general shop. This deposit releases him and allows him to collect his goods.
Selling goods already pledged: endorsement of the receipt alone
What happens if the owner wishes to sell his goods when they are already pledged via a warrant held by a third party? The system also allows for this, thanks to the separate negotiability of the receipt. The owner can only endorse the receipt to a buyer.
According to Article L. 522-28, this endorsement transfers ownership of the goods to the buyer. However, the buyer acquires an asset that remains encumbered by the existing pledge, represented by the warrant, which continues to circulate. The buyer is therefore in the same position as the original seller vis-à-vis the pledgee: he is the owner, but can only withdraw the goods once the warrant holder has been paid in full or by using the consignment option under article L. 522-30. The buyer must therefore be fully aware of the existence of the pledge when acquiring the receipt alone.
What should I do if I lose my receipt or warrant?
The loss or destruction of a receipt-warrant (combined or separate) does not automatically result in the loss of the corresponding rights. As is the case for other securities such as bills of exchange, the legislator has provided for a procedure to remedy the situation (articles L. 522-36 et seq. of the French Commercial Code seem to provide a framework for this, to be verified according to the current version of the Code).
The dispossessed bearer may apply to the court to obtain either a duplicate of the lost document (in the case of the receipt or both documents) or payment of the secured debt (in the case of the warrant alone). To do this, he must prove his ownership of the lost document (for example, by showing the transcriptions on the general shop registers) and provide a deposit to guarantee the rights of any legitimate holder who subsequently presents himself with the original document. This procedure makes operations more secure while protecting the rights of the unlucky bearer.
The warrant receipt is a powerful but technical instrument. A good understanding of its endorsement mechanisms is necessary to secure your transactions. Legal advice beforehand can often avoid costly complications later on. For a personalised analysis of your situation and to ensure that your interests are protected, our team is at your disposal. Please do not hesitate to benefit from our expertise in commercial law Stock-based financing: our firm can help you set up stock-based financing or manage these securities. Contact us for a personalised analysis.
Sources
- Commercial Code, in particular articles L. 522-24 to L. 522-37 (governing the issue, content, endorsement and loss of vouchers, subject to the exact numbering in force).
EN 
FR