A snapshot guide to understanding warehousing liens by Aaron & Partners

UKWA blog written by Nick Clarke, Senior Partner and Head of Dispute Resolution at Aaron & Partners

A snapshot guide to understanding warehousing liens

The warehouse keeper’s lien is one of the most important, yet often misunderstood rights available to warehouse owners.

In this guide, we answer some key and frequently asked questions about liens, including what they are, how they work, and what risks are involved if they are used incorrectly.

What can warehouse owners do if a customer doesn’t pay?

When customers fail to pay storage or handling fees, warehouse owners have two primary legal options: initiate legal proceedings for the unpaid debt or exercise a lien over the stored goods. Exercising a lien can be more efficient and cost-effective than litigation, provided the right to do so is clearly established in the contract.

What is a warehouse keeper’s lien?

A warehouse keeper’s lien is a legal right allowing warehouse operators to retain possession of a customer’s goods as security for unpaid charges. This means the goods can be held until the outstanding fees are settled.

There are two main types of liens:

Common law liens: These arise automatically in certain situations where the service provider holds goods belonging to someone else.

Contractual liens: These are explicitly included in contracts and offer greater protection and flexibility. It’s advisable to incorporate well-drafted lien clauses into contracts. Industry-standard terms, such as those from the UK Warehousing Association (UKWA), include such provisions, making membership beneficial for access to these terms.

What are the risks of using a lien?

While powerful, liens carry risks if misused:

1. Disputed Contract Terms: If the lien clause wasn’t clearly agreed upon or was hidden in unread terms, its enforceability might be challenged.

2. Scope of the Lien: The lien may not cover all charges or specific situations, leading to disputes.

3. Insolvency Issues: If a customer enters administration, exercising a lien may require consent from the administrator or court approval.

4. Third-Party Ownership: If the goods belong to a third party unaware of the storage terms, enforcing a lien could be problematic.

To mitigate these risks, ensure clear contractual drafting, proper incorporation of terms, and seek professional legal advice when necessary.

Why is it called a “lien”?

The term “lien” originates from the Latin word *legare*, meaning “to bind or tie.” Through Old French, it evolved into the legal term *lien*, signifying the right to detain someone else’s goods to secure a debt.

Legal advice on warehouse liens

Warehouse keepers’ liens are powerful legal tools when correctly applied and we would always recommend seeking expert legal advice to help navigate complex areas of law such as this. Our specialist warehousing and logistics solicitors, with strong ties to the UKWA, provide expert advice on enforcing, drafting, and challenging liens across England and Wales.