Home >> Business Encyclopedia And Legal Adviser >> Bank Rate to Clearing >> Bonded Warehouse_P1

Bonded Warehouse

bond, obligor, condition, sum, penalty, payment, duty and person

Page: 1 2

BONDED WAREHOUSE. These warehouses are established for the storage of goods which are liable to customs or excise duties. When a merchant imports such goods he takes advantage of this system in order to delay payment of the duties until they have been sold, or are otherwise required to be dealt with by him. If he paid duty on all the unsold goods which he might import, that payment would often necessitate the sinking until sale of a large amount of capital ; he therefore warehouses the goods and enters into a bond that they shall not 'be removed until the duty has been paid. While the goods are so warehoused they are said to be In Bond. The proprietor of the warehouse is also required to enter into a bond—thus the name, bonded warehouse. He is not only responsible to the owner for the safe custody of the goods, but he is also responsible to the Crown for the duties to which they are subject. But this responsibility is in effect materi ally diminished by the great care taken by the Crown as to the position and construction of the warehouses, the preservation of the goods stored therein, and as to their removal.

Before any building can be used as a warehouse, it must be approved by the Crown, and a bond must le given with one or more sufficient sureties for X3000, or even a larger amount. The penalty of the bond is only £1000 in the case of a bottling warehouse. Nor is the privilege of keeping a bonded warehouse accorded to an applicant as a matter of course, for he is required to satisfy the authorities that such a warehouse is necessary and is desired by the local merchants. Certain officers of the Crown are also responsible for the security of the warehouse, and to this end all locks, doors, and windows are placed under their supreme control. Neither the owner of the goods, or even the warehouse keeper, may by himself, or by any person in his employ, open or gain access to a warehouse except in the presence of an officer acting in the execution of his duty. The warehouses are bound to be numbered and distinguished. and their contents arranged in a manner convenient for inspection ; and books must be kept which show precisely the daily receipts and deliveries of goods, and all dealings therewith, and these are checked by the officers. It is impossible to even "rack " wine (pour the contents of one cask into another) without due permission, and a supervision and record of the operation. Goods are delivered into the warehouse on the authority of a document called a warrant, and they are taken out by a " permit," which is obtained from the collector of the duty after its payment. Carriers also

are licensed, and known as bonded carmen, who alone may remove goods subject to duty ; they are always accompanied by an officer. See CUS TOMS ; IMPORTATION AND EXPORTATION.

BONDS—Generally.—A bond or obligation is a deed whereby a person obliges himself, his heirs, executors, and administrators, to pay to another person a certain sum of money ; the party binding himself is called the obligor, and the obligee is the person to whom the money is to be paid. Bonds are generally subject to a condition—for example, that on payment of the sum mentioned therein, or in the event of the obligor performing a certain act, or refraining from doing certain things, the bond shall be void ; and the obligor, in such bond, subjects himself to payment of the sum mentioned therein as a penalty in case the condition is not duly perfcrnied. This instrument is distinguishable from an INDENTURE (q.v.) by its being obligatory only on the obligor, and requiring only one seal, expressive of the assent of the party intended to be bound by it. The first part of the document is the bond proper, and the second part is the condition. The statute of limitations does not run as against a bond until twenty years after the right to sue thereon has accrued ; had the terms thereof been embodied in an ordinary agreement, the statute would have commenced to run six years after. There may be more than one obligor, and the obligation may be joint, or joint and several. The sum inserted in the bond as a penalty to secure the performance of the condition is usually double the amount of the sum intended to be secured by the instrument ; but in case the forfeiture has accrued by reason of non-payment of money, only the actual sum owing and interest may be recovered, and when by reason of any other non-performance of the condition, only the actual damages sustained. The obligor has not the option of paying the penalty and continuing to break the terms of the condition. Thus, if the condition of the bond is that the obligor should not engage in a certain trade in a certain locality during a certain period, the bond shall be void, the obligor cannot pay the penalty, and engage in the trade in the specified locality and time. Should he do so, the Court will not only make him pay the penalty, but will also restrain him from committing the breach of the condition.

Page: 1 2