Section 21 of WDR Act : Section 21: Conclusiveness Of Negotiable Warehouse Receipt

Explanation using Example

Imagine John buys a large quantity of wheat and stores it in a warehouse managed by XYZ Storage Co. He receives a negotiable warehouse receipt from XYZ Storage Co. that describes the quantity and quality of the wheat stored. A few months later, John sells the wheat to Emily and endorses the negotiable warehouse receipt to her in exchange for payment. Emily, now in possession of the receipt, is assured of the wheat's quantity and quality as described in the receipt. If any dispute arises with XYZ Storage Co. or anyone claiming the wheat through the company (perhaps a previous owner or a creditor of the warehouse), the receipt in Emily's hands is conclusive evidence of her ownership and the state of the goods as when John stored them, so long as she purchased the receipt for valuable consideration. This means that Emily does not have to prove the validity of the receipt or the goods' description; the law presumes it to be accurate, protecting her interests as a bona fide purchaser.