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84-7-204. Duty of care; contractual limitation of warehouse's liability. (a) A warehouse is liable for damages for loss of or injury to the goods caused by its failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances. Unless otherwise agreed, the warehouse is not liable for damages that could not have been avoided by the exercise of that care.

(b) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage beyond which the warehouse is not liable. Such a limitation is not effective with respect to the warehouse's liability for conversion to its own use. On request of the bailor in a record at the time of signing the storage agreement or within a reasonable time after receipt of the warehouse receipt, the warehouse's liability may be increased on part or all of the goods covered by the storage agreement or the warehouse receipt. In this event, increased rates may be charged based on an increased valuation of the goods.

(c) Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the bailment may be included in the warehouse receipt or storage agreement.

(d) This section does not modify or repeal any part of chapter 82 of the Kansas Statutes Annotated, and amendments thereto, not specifically repealed by this act.

History: L. 2007, ch. 90, ยง 10; July 1, 2008.

KANSAS COMMENT, 1996

Subsection (1) establishes a negligence standard of care for warehousemen. This standard is substantially the same as that found in former K.S.A. 82-121, and also corresponds to the standard of care imposed by present K.S.A. 34-263. Former case law was in accord. Gaines v. Cody, 175 K. 187, 263 P.2d 252 (1953); Lee v. Midwest Cold Storage & Ice Corp., 155 K. 876, 130 P.2d 574 (1942). Under this subsection, liability may be increased by agreement; the same is apparently true under K.S.A. 34-263. See Farmers Grain, Livestock & Coop. Mercantile Ass'n v. Commodity Credit Corp., 145 F. Supp. 788 (D. Kan 1956). The standard of care for goods under a bill of lading are defined in 84-7-309.

Subsection (2) permits a warehouseman to limit the amount of his liability. This provision is new to Kansas law. Any such limitation is not effective with respect to the warehouseman's liability for conversion to his own use. In Lipman v. Petersen, 223 K. 483, 575 P.2d 19 (1978), the court held that a limitation of liability clause was inapplicable where the warehouseman had misdelivered the goods to a third party.

In Butler Mfg Co. v. Americold Corp., 835 F. Supp 1234 (D. Kan. 1993), the court held that 84-7-204 applied to the relationship between the defendant, Americold, and the plaintiff, Butler. The contract between the parties provided that Americold was not a bailee of stored records. It stated that the relationship was that of lessor and lessee and that Americold was merely an agent of Butler to provide services provided for in the contract. The contract also limited damages to gross negligence or willful injury. The court held that in fact the defendant was a warehouseman engaged in the business of storing goods for hire under 84-7-201(1)(h) and that 84-7-204 applied, despite the description of the relationship and the limitation of damages clause in the contract. The relationship of the parties and not the label in the contract determined if the defendant was a warehouseman. The duties of ordinary care in 84-7-204 thus applied and could not be disclaimed in a manner contrary to 84-7-202(3) or 84-1-202(3).

In a decision regarding different parties, however, the court held that the defendant, Americold, was not a warehouseman where portions of the premises were truly leased to another, who controlled the premises and stored goods for a third party. Butler Mfg. Co. v. Americold, Inc., 841 F. Supp. 1113 (D. Kan. 1993).

Subsection (3) is new to Kansas law.

Subsection (4) of this section makes one minor change from the 1972 official text of the Code. The Official Text provides: "This section does not impair or repeal . . . ." Kansas has omitted the words "impair or," and has completed the section as suggested by the Official Text. K.S.A. 82-101 through 82-149, and 82-156 through 82-160, were specifically repealed. See 84-10-102. The reference in 84-10-102(1) to K.S.A. 82-161 appears to be in error. K.S.A. 82-161 through 82-171, providing for bonding and licensing of warehousemen, and K.S.A. 82-201 through 82-209, dealing with certificates and receipts issued by elevators and warehouses, were not repealed.

Revisor's Note:

Former section 84-7-204 repealed by L. 2007, ch. 90, ยง 78 and the number reassigned to the current text.

CASE ANNOTATIONS

1. Liability clause in nonnegotiable receipt held inapplicable where loss of goods was result of conversion by warehouseman. Lipman v. Petersen, 223 Kan. 483, 484, 485, 575 P.2d 507.

2. Whether contractual provision exculpating warehouseman from all liability for its own ordinary negligence is enforceable examined. Butler Mfg Co. v. Americold Corp., 835 F. Supp. 1274, 1279 (1993).

3. Whether lessors of storage area were warehousemen under UCC for purpose of leasehold contracts examined. Butler Mfg. Co., Inc. v. Americold Corp., 841 F. Supp. 1107, 1112 (1993).

4. Whether warehouse operator who leased space to lessee was liable for damage to sublessee's property examined. Butler Mfg. Co., Inc. v. Americold Corp., 841 F. Supp. 1113, 1117 (1993).

5. Fact issues concerning claim by bailor that bailed property was missing precluded summary judgments. Sunfresh, Inc. v. Bean Acres, Inc., 180 F.Supp.2d 1224, 1229 (2001).


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