Re Peachdart Ltd

A seller's claim to ownership of handbags made from its leather was a charge, which was void because it was not registered.

Citation
[1984] Ch 131
Court
Chancery Division
Year
1984
Subject
Commercial Law
Topic
Retention of title clauses

Facts

A seller of leather supplied it to Peachdart, a manufacturer of handbags, under a contract that provided that ownership of the leather would remain with the seller until it was paid for, and that, if the leather was made into handbags, the seller would have ownership of the handbags. Peachdart went into receivership. The seller claimed the handbags made from its leather.

Legal principle

Vinelott J held that the seller had no claim to the handbags, because the provision giving it rights in them was a charge, which was void for want of registration under the Companies Act. He said that the parties must have intended that, once Peachdart began to work on the leather, its property in the leather would cease and it would become the property of Peachdart, subject only to a charge in favour of the seller. The seller could not have intended to become the owner of the handbags, which included Peachdart's labour and other materials.

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