What are the Differences between a Warehouse Lease Contract and a Warehousing Contract?

Are you confused with the title? If a party leases a warehouse for storage, the two contracts shall state the same thing, and there shall be no difference. However, from the perspective of the nature of a contract, the two contracts have huge differences on the rights and responsibilities, consequences of breach of contract, and the way to defense when there is a dispute.

In the “Contract Law”, Chapter 13 stipulates relevant articles on a lease contract, and Chapter 20 stipulates relevant articles on a warehousing contract. A lease contract requires a lessor delivers the warehouse to the lessee who uses the warehouse, pays rent for the occupation and use of the warehouse. A warehousing contract requires a depositor delivers goods to the safekeeping party who stores the goods in a warehouse, and keep the goods; and the depositor pays the warehousing fee (normally includes the service fee on the storage, operation and etc.) for the service of the safekeeping party.

Since the two contracts have the above-mentioned fundamental differences, the articles of the two contracts shall have different priorities.

In a warehouse lease contract, the lessor shall ensure that the warehouse meets the agreed propose; and the lessee shall be responsible for the use of the warehouse, the management of the storage of the goods and etc.. Upon the expiration of the lease term, the lessee shall return the warehouse, unless otherwise agreed, normally the lessee shall restore the lease item to its original condition. Where the term of a lease is not agreed or the agreement is not clear, the lessee may terminate the contract at any time. In practice, it is very common that upon expiration of the lease term, the lessee continues to use the lease item without objection by the lessor, if the lessee would like to terminate the contract, the lessor would require the lessee to compensate for loss amount to the rent of one month or server months. Some of the lessor even detains the lessee’s goods and claims for the rent for the period of detaining the goods. However, normally the court would not support the lessor’s such claim. The relevant laws have not set a lieu on the goods in a lease contract. Under such circumstance, the lessee shall prove two points, which are, the lessee has notified the lessor to terminate the contract in advance; and the lessee has returned the warehouse to the lessor, normally the lessee could provide the evidence on the return of keys and etc..

In a warehousing contract, the safekeeping party shall be responsible for the storage of the goods, and undertake the compensation liabilities on the loss or damage of the goods. If the goods is dangerous, the safekeeping party shall have the relevant qualifications, in addition, the safekeeping party shall continuously keep the qualifications during the warehousing term. The safekeeping party shall pay special attention to 2 rights, which are (1) the lien, that is, if a depositor fails to pay the fee and other expenses in accordance with the contract, the safekeeping party could set a lien on the goods, however, the parties could agree to exclude this rights in the contract separately; (2) the disposal, that is the depositor fails to pick up the goods after reminder, the safekeeping party could may place the goods in escrow., if necessary, the safekeeping party could dispose the goods in advance.

In addition, in judicial practice, the dispute over a lease contract is under the jurisdiction of the civil court, but the dispute over a warehousing contract is under the jurisdiction of the commercial court. Nowadays, many civil courts have set a pre-litigation mediation procedure, in view of this, if a contract has not stipulated rights and responsibilities clearly, and a party would like to solve the dispute in a pre-litigation mediation procedure, then the party could try to file the case under the reason of a lease contract dispute. It shall be mentioned that if the contract is a warehousing contract, the case might be transferred to the commercial court during the hearing of the civil court.