Warehousing transactions under the Bulgarian Commerce Act
It is assumed that the legal definition of the public warehouse deposit contract is contained in Art. 573 CA - a contract under which the depositary accepts goods, in return for consideration, with an obligation to keep and return them to the depositor or the person authorised to receive them. The legislature requires conclusion in writing and, in addition, the CA provides that the contract be entered in the stock records.
The subject of a contract for deposit in a public warehouse are fungible movables which have the nature of goods (i.e. in the turnover), the contract for deposit in a public warehouse may be and usually is incorrect (i.e. the depositor must return items of the same kind, type, quantity and quality). There is no rule against signing the contract as a correct deposit - in this case the depositor shall be obliged to return the items supplied by the depositor.
Duties of the depositary:
- to protect the goods, i.e. take any action with a view to preserving their physical integrity and their quality.
- to provide the depositor with access to the relevant goods, so that the latter can take a sample, pack or sort them, or take other measures in relation to their conservation and preservation.
- provide assistance, meaning that the depositary must notify the depositor, respectively the person who is entitled to receive the goods, if they establish any changes occurred to the goods which could lead to a deterioration of their quality.
- Unless otherwise agreed, the depositary has an obligation to insure the deposited goods, such that in the contract for deposit in a public warehouse the parties can determine the amount of their insurance amount or the insurer themselves.
- the depositary shall issue at the request of the depositor a warrant, which in this case means a general warrant as per the CA and Ordinance No 3, which is issued at the time of conclusion of the contract and refers to the total number of deposited goods. The depositary shall issue a warrant also for individual amounts of deposited goods in exchange for the general warrant. Practically replacing one security with another security. The depositary may refuse to issue such a warrant, if the depositor has not paid the remuneration, has not refunded their expenses incurred in connection with the storage of the goods or there are other substantial reasons (as stated in the Act).
- to return either the same goods or goods of the same type, quality and quantity, such that where the contract has been agreed as an irregular deposit, the deduction of wastage may be done only if it was agreed by the parties. If a warrant is issued, the depositary must transfer the goods to the legitimate holder of the warrant.
Obligations of the depositor:
- to provide the depositary with information about the goods concerned, their nature, quality - so that the depositary can take the appropriate action to store them.
- to pay remuneration to the depositary, or if nothing has been agreed, the legislature provides that the remuneration is due quarterly.
- to reimburse the expenses incurred by the depositary in connection with the safekeeping of goods, respectively, related to their insurance etc.
In favour of the claims of the depositary, the legislator regulates the right of legal pledge over the goods. That is, the depositary may sell the goods extrajudicially and realise their price.
There are particular grounds for termination of the contract for deposit in a public warehouse:
- The contract shall be terminated upon expiry of the agreed term, and if there is no such term - with the expiration of 3 months from the deposit of the goods. It follows that the contract for deposit in a public warehouse is always concluded for a fixed term.
- The legislator enables the depositary to unilaterally terminate the contract, if the goods are threatened by injury, or respectively perishing, or the goods in question pose a threat to the quality of the rest of the deposited goods in the public warehouse or where there are other substantial reasons (as stated in the Act).
All general grounds for termination of the contract are also applicable.
The CA introduces a special limitation period in respect of claims for damages under the contract for deposit in a public warehouse - 1 year, which starts from the time of receipt of goods, respectively, from the day on which the goods should have been received, and if the goods have perished - the limitation period runs from the day of finding out of this fact. If the respective damages or perishing of goods is due to "intentional behaviour of the depositary", the limitation period for an action for damages is 3 years.
It is a promissory note, consisting of two parts, but they are separate securities. The first security is called "commodity record" or "tsegula." The second security is a "pledge record" or "warrant".
The commodity record materialises right to receive the goods, respectively to make use of the goods.
The pledge record materialises a pledge over the goods.
At the request of the depositor, the depositary must issue a warrant for the goods.