What is a Warehouse Receipt?
The warehouse receipt is most commonly associated with transactions that involve futures or commodities. Essentially, warehouse receipts are proof of the existence of the goods in question. The receipt will usually include important details about the nature of the commodity that help to confirm the presentation made by the seller, and will include information about the physical location of the acquired goods.
The typical warehouse receipt will include specifics about the commodities that are of especial relevance to the transaction. First, the receipt confirms the number of units that are involved in the business deal. Often, the detail will also include the unit price as well as the extended price for the entire purchase. This helps the investor to have clear documentation of the basics of the purchase.
Along with the information about the cost of the acquired commodity, the warehouse receipt will often include some information about the quality of the acquired goods. The exact amount of detail about the level of quality will vary. In some instances, the information will include documentation of grades or classifications that are normally used with the particular type of commodity. Details about the originating location for the commodity may also appear in the text of the warehouse receipt.
A warehouse receipt functions as one of the instruments involved with the transfer of ownership in both trades involving commodities as well as futures. The receipt can be constructed as a negotiable document, which can be made to the order of a company or the bearer of the document. A non-negotiable warehouse receipt will only allow delivery to the person or business that is named as the owner in the document. Typically, a warehouse receipt will accompany other pertinent documents relating to the sale of the commodities, with copies placed in the possession of the new owner, the warehouse used for storage, and the seller.
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