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Can I hold material in storage as collateral toward other outstanding unpaid invoices from a particular client?

Asked over 2 years ago - Chicago, IL

I have a client that has owed me a substantial amount of money for a year and a half. The same client also stores material for a different job in my warehouse and has always kept up with paying these storage charges. The job that the client owes for is not connected in any way to the material in storage. Client now wants to pull all material out of storage but I feel I will then not be paid for the other outstanding invoice. Can I legally not release the material from storage until the other outstanding invoice is paid even though the material in storage is not related to the outstanding invoice?

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Attorney answers (1)

Erik Glen Swanson

Reputation Level 15

Answered over 2 years ago. Debt Collection Attorney in Skokie, IL.

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No, not unless you havea clear and binding contact that gives you the right to hold unrelated property as collateral/payment. Your obligation to the client in bailment (put simply, a property holder) are seperate and independant of the creditor/debtor relationship, again, barring an agreement to the contrary.

If your standard agreement does not contain this language, it might be in your interest to have an attorney review and draft you a better form contract that would allow you to do this, so you don't face the same situation again.

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