Compaq Computer Ltd v Abercorn Group Ltd
A retention of title clause giving the seller rights to the proceeds of sub sales by the buyer creates a registrable charge, and it does not have priority over a factor of the debts.
Facts
Compaq sold computers to Abercorn, a dealer, under a contract which provided that title would not pass until payment, and that, if Abercorn sold the computers before paying for them, it would hold the proceeds on trust for Compaq. Abercorn sold the computers and assigned its book debts to a factoring company. When Abercorn went into receivership, Compaq claimed the proceeds of the resales.
Legal principle
Mummery J held that the provision about the proceeds of resale created a charge over book debts, which was void for lack of registration. He said that the clause was intended to secure the payment of the price, and that the buyer's interest in the proceeds of resale ended when Compaq was paid, so it was a charge, not an absolute trust. The factoring company, which had taken an assignment of the debts without notice, had priority.
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
- Armour v Thyssen Edelstahlwerke AG [1991] 2 AC 339
- 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
- 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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