Commercial Law

Quasi-security cases

Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25

Key Point

• In the absence of an express provision to the contrary, the seller’s property in the goods will be lost and vest in the buyer if the identity of the goods is destroyed in the manufacturing process or if they are transformed by manufacture into different goods, but may be retained if the goods are in their original state and can easily be removed from the finished product.
• It is not possible to retain title in something that no longer exists.

Facts

• The plaintiffs supplied resin to the defendants for chipboard manufacturing under a contract stating that ownership of the resin would transfer only after full payment for all supplied goods.
• Since the manufacturing process rendered the resin irrecoverable, the plaintiffs claimed against the defendants' receiver for unpaid resin, arguing that any chipboard produced with it was subject to a charge for the outstanding amount, which was not void under section 95 of the Companies Act.
• Defendant appealed.

Issues

• Whether all resin supplied remained the property of the plaintiffs until paid for in full; and that any chipboard manufactured with any such resin was the property of the plaintiffs.
• Whether any charge resulting from such condition was void by reason of section 95 of the Companies Act 1948and (if so) whether the defendants were entitled to rely on the invalidity of any such charge.
• Whether there was a fiduciary relationship here between the defendants and the plaintiffs in the nature of the relationship of bailee and bailor.