The parties disputed the property in goods which had been sold and then gone through successive manufacturing processes. The contract included a retention of title clause. Fibres were converted into manufactured carpets and thus lost their identity and thus, from the seller’s perspective, the seller lost any relevant right of property. The issues included whether there was a creation of a trust of some kind or a charge and the relevant clause producing the result that the contractual intent appeared to be that there should be a beneficial entitlement attaching in the seller’s favour in respect to the proceeds of sale of manufactured items, that is to say, the carpets which had emerged as a result of the application of the processes to the yarn. Slade J saw the case as posing a choice between either a trust of which the supplier ‘was the sole beneficiary’ or ‘by way of a trust under which Monsanto’, which was the supplier, ‘had a charge in equity’. Slade J discussed the nature of a retention of title clause: ‘[A]ny contract which, by way of security for the payment of a debt, confers an interest in property defeasible or destructible upon payment of such debt, or appropriate such property for the discharge of the debt, must necessarily be regarded as creating a mortgage or charge, as the case may be’. And ‘The technical difference between a `mortgage’ or `charge’, though in practice the phrases are often used interchangeably, is that a mortgage involves a conveyance of property subject to a right of redemption, whereas a charge conveys nothing and merely gives the chargee certain rights over the property as security for the loan.’
Judges:
Slade J
Citations:
[1980] Ch 228
Cited by:
Cited – Sandhu (T/A Isher Fashions UK) v Jet Star Retail Ltd and Others CA 19-Apr-2011
The claimant had supplied clothing to the defendant under a contract containing a retention of title clause. The defendant fell into financial difficulties and administration. The claimant now sought damages for conversion of its goods by the . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 11 May 2022; Ref: scu.434835