You might be wondering…

“Can the seller simply refuse to release the goods until the buyer pays?”
“How are storage costs calculated?”
“Do the costs have to be demonstrably necessary?”

Clients often ask me…

“I have a machine sitting in my warehouse that the buyer hasn’t collected. Can I charge them for storage?”
“And if they don’t pay, can I withhold the machine?”
“What if the machine gets damaged by damp during storage—am I or the buyer responsible?”

What the law says (Section 2120(3) Civil Code)

• A party storing goods for the other may withhold them until the other party pays the reasonably incurred costs of storage.

• Storage applies when the buyer is in default with collection or payment.

• The costs must be reasonable and provable—reflecting the level of care the goods required under the circumstances.

Common mistakes and risks

• Seller does not itemize the costs. The buyer may argue that withholding is unlawful.

• Costs are excessive. If the seller charges unreasonable amounts, the court may refuse them.

• No written notice. The buyer then claims they never knew the goods were being withheld.

Step-by-step approach

For the seller:

1. If the buyer delays, ensure proper storage of the goods.

2. Calculate the reasonable costs (storage, energy, handling).

3. Notify the buyer that the goods are withheld until costs are paid.

4. Release the goods only after payment.

For the buyer:

1. Don’t delay collection or payment—it will only cost you more.

2. If you receive a payment demand, act quickly to avoid withholding.

3. You are entitled to an itemized statement and proof of costs.

Real-life example

A supplier informed the buyer that a machine was ready, but the buyer failed to collect it for six months. The supplier stored the machine in a rented hall and billed the buyer for the storage costs. When the buyer refused to pay, the supplier withheld the machine. The court sided with the supplier—the buyer had to cover the documented reasonable costs before retrieving the machine.

Why DIY contracts are risky

Generic “free contract templates” rarely address storage costs or rights of retention. The result? The seller doesn’t know if they can legally withhold the goods, and the buyer claims they were never told about costs—leading straight to dispute.

Lawyer’s recommendation

To avoid conflict, I recommend expressly including provisions in the contract on storage costs and procedures if the buyer defaults. This gives both parties legal certainty and minimizes disputes.

Practical checklist:

• Does the contract specify who pays storage costs?

• Does it define the procedure if the buyer is in default?

• Are the costs calculable and provable?

• Is a right of retention clause included?

FAQ

Can the seller always withhold goods?
No, only if the buyer fails to reimburse reasonable storage costs.

Must the costs be documented?
Yes, courts require proof of reasonableness (e.g., invoices for warehouse rent, utilities, handling).

Can the buyer challenge the costs as excessive?
Yes, and the court may uphold such objections.