Your Legal Protections
When you buy from us, we enter into a bailment agreement. That means the whisky cask is yours. You might think that’s obvious, but it’s not how all cask brokers work. Your contract with us makes your cask a bailment, which gives you essential protection.
What is bailment?
In English law, a “bailment” is when a person (the bailor – that’s you) gives physical property to another person (the bailee – that’s us) on the condition that the goods are either:
- Returned to you at an agreed date
- Disposed of, following your instructions.
Bailment means that we have physical custody of your casks, but they are your property.
How Bailment Works
Bailment is based on well-established trade laws. Courts decided transferring goods to a custodian does not grant property rights to the custodian. Instead, an asset’s owner says: ‘I want you to look after this for me, but it’s still my asset.’
Bailment clarifies that the cask belongs to you (the bailor) rather than us (the bailee). This is important because, in the unlikely event that we’re insolvent, your cask would be protected from our creditors. Of course, we don’t plan on going anywhere. But if something happens, you’re covered.
Why haven’t I heard About Bailment Before?
Bailments are uncommon in the investment world. That’s because a bailment can only apply to a physical asset. Bailments don’t apply to stock certificates, trust deeds, unallocated accounts, futures or other bookkeeping entries. If it’s a physical asset, you can have a bailment. If the investment is a piece of paper, which only has value in the abstract, you can’t have a bailment.
When you have a paper asset, securities law applies. Securities law is for contracts, trusts, deeds and other paper assets.
Bailments are simple compared to contracts
Securities law is complicated. There is more potential to argue about rights and ownership of a paper asset than with the bailment of a physical good.
Why a bailment is important
When a business fails, liquidators are appointed to take control of the company’s assets. They sell the assets and arrange a fair distribution to creditors. Liquidators usually claim ownership of every asset on a failed company’s balance sheet.
Now, we don’t plan to fail. And it is unlikely we would, but if it happened, your cask would be safe. Liquidators cannot treat bailments as the property of the company. So they couldn’t claim ownership of your cask. Because the cask was never our asset, it was always your asset.
How do you know your cask is protected as a bailment?
We explain our bailment arrangement in our Terms and Conditions. Any whisky cask we sell belongs to the person we sell it to. It’s evidenced in the contract between our warehouse operators and us and our contract with you.
Your cask will never appear on our balance sheet. A balance sheet is a public document were the assets that belong to a company are listed and filed at Companies House. Creditors expect the assets listed on the balance sheet to protect them from a company’s insolvency. But your cask will never be on our balance sheet, and no one can claim ownership but you.
Your payment is for a custody service. Your cask is your property in our safekeeping. Your payment evidences the nature of the agreement. You pay for the protection of your property, and are not transferring your property to us for gain. We deduct the custody fee you pay from your cash balance and send it to you in your monthly statement.
Insurance for Your Cask
For full peace of mind on your purchase, Spiritfilled have procured a comprehensive cask insurance policy provided by Aviva plc, protecting against loss by Theft, Fire, Flooding and Accidental Damage for the full value of your cask(s). This policy is reviewed quarterly to ensure the casks are insured at the correct value.
Aviva plc is a British multinational insurance company headquartered in London. It has around 33 million customers across 16 countries. In the United Kingdom, Aviva is the largest general insurer with a 5 star Defaqto rating.