Armour v Thyssen Edelstahlwerke AG
An all monies retention of title clause, under which the seller keeps ownership until all debts owed by the buyer are paid, is valid and does not create a security requiring registration.
Facts
Thyssen, a German steel producer, sold steel strip to a Scottish company, under a contract which provided that title would not pass until all debts owed by the buyer to the seller had been paid, not just the price of the particular goods. The buyer went into receivership, owing money to Thyssen, and still holding some of the steel. The receivers argued that the clause was an attempt to create a security without possession, which was invalid under Scots law.
Legal principle
The House of Lords held that the clause was valid, so Thyssen was entitled to the steel. Lord Keith said that, under the Sale of Goods Act 1979, the seller may reserve the right of disposal of the goods until certain conditions are fulfilled, and the property in the goods does not pass until those conditions are fulfilled. A provision that property would not pass until all debts owed by the buyer were paid was such a condition, and did not create a right in security. It made no difference that the condition related to debts other than the price of the particular goods.
Related cases on retention of title clauses
- Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676
- Re Andrabell Ltd [1984] 3 All ER 407
- Re Bond Worth Ltd [1980] Ch 228
- Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25
- Clough Mill Ltd v Martin [1985] 1 WLR 111
- Compaq Computer Ltd v Abercorn Group Ltd [1991] BCC 484
- E Pfeiffer Weinkellerei-Weineinkauf GmbH & Co v Arbuthnot Factors Ltd [1988] 1 WLR 150
- FG Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2013] EWCA Civ 1232, [2014] 1 WLR 2365
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