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02 Oct 2019

Warehouse receipts - Contract, mistake and estoppel


The Commercial Court has delivered a judgment which will have important implications in the context of commodity finance and, in particular, the use of warehouse receipts in “repo” transactions. 

In Natixis S.A. (“Natixis”) v Marex Financial (“Marex”) and Access World Logistics (Singapore) Pte Ltd (“Access World”), Natixis has been granted judgment on its claim against Marex Financial (an independent commodities broker and trader) in the sum of approximately US$32 million. The claim related to sale and repurchase (or repo) agreements, in which it transpired that warehouse receipts for nickel, provided by Marex to Natixis, had been forged by a third party. Natixis sued Marex under the repo agreements and was awarded the total sum sought. The case is interesting for its analysis of the doctrines of common mistake and estoppel. In a wide-ranging decision, the court also considered the legal status of warehouse receipts and the operation of a limitation of liability clause in the warehouse owner’s terms and conditions. 


In late 2016/2017, Natixis agreed to purchase nickel from Marex pursuant to five spot purchase contracts (the “Purchase Contracts”, referred to as PC1 to PC5). The nickel was stored at warehouses owned by Access World and Marex had options to repurchase the nickel at later dates. In early 2017, Access World issued press releases advising that it had become aware of forged warehouse receipts in its name circulating in the market. Following an authentication process, Access World ultimately confirmed that none of the warehouse receipts provided by Marex to Natixis were genuine. Following the discovery, Natixis closed out nickel future positions it held and claimed the sum of US$32,114,093 in damages from Marex.

It should be noted that prior to Marex and Natixis entering into two of the Purchase Contracts (PC4 and PC5), Access World had conducted a physical inspection of the warehouse receipts and (erroneously) informed Marex that it considered those warehouse receipts to be genuine.

The claim

By the time of the trial, the parties agreed that the warehouse receipts held by Natixis were all fake, and that they were the same documents as were delivered by Marex to Natixis pursuant to the Purchase Contracts.  In light of this, it followed that – absent a finding of common mistake (or warranty / estoppel) - Marex had breached a number of clauses in the Purchase Contracts:

  • Marex failed to pass title to Natixis on receipt of payment;
  • Marex did not have good (or any) title to the nickel and did not have the full and unqualified right to sell and deliver the nickel to Natixis;
  • The nickel was not free of any encumbrance or adverse claim by third parties; and
  • Marex failed to deliver the nickel to Natixis on the relevant payment dates.
What was disputed by Marex was Natixis’ claim that it had also breached the Purchase Contracts by failing to deliver the “Required Documentation” (which included the warehouse receipts). Marex argued that the promise to deliver the warehouse receipts should be construed only as a promise to deliver whatever warehouse receipts it had been provided with, even if those warehouse receipts turned out to be forgeries. The court disagreed with this interpretation, describing it as “uncommercial and unbusinesslike”; “contrary to the ordinary and natural meaning of the clauses”; and one which would have “potentially absurd consequences”.

Instead, the court concluded that the requirement to provide warehouse receipts for the nickel was a requirement to provide “objectively genuine warehouse receipts”, and that Marex therefore failed to do so.

Common mistake

The court’s decision on the interpretation of this clause effectively closed the door on Marex’s attempt to avoid the contracts on the grounds of common mistake.

The court considered previous case law (and, in particular, the principles set out in the Court of Appeal’s decision in The Great Peace [2003] QB 679) and confirmed that in order successfully to plead common mistake, it must be proved that the contract itself does not already provide for a party to bear the risk of any mistake, whether by express wording, implication or otherwise. Here, the court concluded that the requirement placed on Marex to supply objectively genuine warehouse receipts meant that the parties had agreed that Marex assumed responsibility for any forged documents.

Warehouse receipts, contract and estoppel

Marex sued Access World, contending that it was contractually liable to it for warranties to deliver metal it gave to Marex and/or Natixis, and was therefore estopped from denying the right of the endorsee of the warehouse receipts (Natixis) to delivery up of the nickel upon their presentation.

It was accepted by the parties that, in the absence of a separate (contract) claim by Marex against Access World, no argument for estoppel could arise (estoppel being a shield and not a sword, and not a cause of action in its own right). Marex argued for the existence of a contract in various ways.  In particular, it focussed on emails from Access World in which the warehouse erroneously confirmed the authenticity of the PC4 and PC5 receipts. The court was unpersuaded by Marex’s arguments, reaching the following main conclusions:

  • The status of a warehouse receipt has not been definitively determined under English law. It is not a document of title in the common law sense. Rather, the relationship between a warehouse and someone with a higher right to possession of goods is that of bailment.
  • In this case, Access World acted as bailee of the nickel. The bailor of the nickel remained the first order party, Straits (a third party wholly unconnected with Marex or Natixis). Upon presentation of an original warehouse receipt by a person with a higher right to possession than Straits, Access World would attorn to that person (that is, acknowledge that they held the goods on behalf of that party).
  • A contract does not, however, arise on a warehouse receipt prior to presentation and attornment. In this case, no actual warehouse receipt was ever provided by Access World (the documents Marex received were forged by a third party). Further, the court dismissed Marex’s argument that a genuine warehouse receipt would have given rise to a unilateral contract between its holder and Access World, finding that no contract could in any event arise until presentation of a genuine warehouse receipt.
  • A warranty (in the form of a collateral contract) was also not found to exist between either Marex or Natixis and Access World. In particular, Marex was unable to evidence any intention to create legal relations, nor any actual contractual offer. Further, the court held that if the receipt itself was not capable of constituting a contract, emails in relation to its authenticity could have no better contractual status.
  • Finally, the court concluded that estoppel is personal to the parties and therefore cannot be a basis on which to order delivery of goods belonging to a third party (so that it could not give rise to a defence to the claim by Natixis against Marex).

Negligence and negligent misstatement

Following a detailed analysis of the particular circumstances of this case and the reasonable verification standards which should have been applied, Marex succeeded in establishing that Access World was negligent in failing to identify that the PC4 and PC5 receipts were forgeries. The court concluded that Marex itself contributed to that negligence and reduced the recoverable damages by 25%.

Limitation of liability

Access World’s terms and conditions limited its liability to EURO 100,000 in respect of any warehouse receipt it authenticated. Marex argued that if there was no contract between it and Access World, the warehouse could not rely on its terms and conditions. In the alternative, it submitted that the limitation of liability was not effective, as appropriate notice of such a “liability-negating” clause had not been given, and that it was unreasonable within the meaning of the Singapore Unfair Contract Terms Act (the Singaporean equivalent of UCTA 1977).

The court concluded that the terms and conditions did take effect, notwithstanding the absence of a contract. After hearing extensive evidence, the court concluded that sufficient notice had been given and that the limitation itself was reasonable in the circumstances (and within the meaning of the Singapore Unfair Contract Terms Act).


The central contract claim by Natixis against Marex was dealt with relatively simply by the court. What was more problematic was the claim against Access World. Although the court awarded a measure of damages against Access World, ultimately it concluded on the facts of this case that it was Marex which was best placed to know and evaluate the commercial risks arising in the transaction, not the warehouse with which the commodity was stored.  The decision also provides a helpful overview of the use and nature of transferrable warehouse receipts.

Stephenson Harwood LLP (Edward Davis, Jonathan Spearing and Jeremy Livingston) acted for Natixis in this case.




Jonathan Spearing

Jonathan Spearing
Partner and global head of trade and commodities

T:  +44 20 7809 2228 M:  +44 7785 463 216 Email Jonathan | Vcard Office:  London