What can we do if a distribution warehouse holding our goods hostage?

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What can we do if a distribution warehouse holding our goods hostage?

We have goods at a distribution warehouse. They will not release our goods because we owe them money. But we are only 7 days late. They have over $40k in value at the warehouse and we owe them $10k- but only $5k is due now; we have no contract. Can they hold our goods hostage?

Asked on May 14, 2012 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Yes, they may hold your goods in this circumstance. A warehouse may place a lien on goods at it to secure payment of customer debt; also, the warehouse is not obligated to have its employers perform work and/or to spend money (e.g. to spend staff time and money on fulfilling and shipping orders, or on packing up and shipping the goods back to you) when you are in default or arrears on your bills. You need to either negotiate to some mutualy acceptable resolution--e.g. if you can pay $2k, will they ship some orders for you?--or see if you can't take out a loan, possibly  using your inventory as collateral (or by "factoring"--i.e. having someone loan you money against orders you have received) to pay the amount in arrears.


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