Case 8 - Supply of material to manufacturer (II)

Summary

(Retention of title – sale of manufactured products – combined products and proceeds clause)

As in case 7, B has manufactured curtains from cloth supplied by A under retention of title. This time however, B has sold all the curtains produced to two customers, D and E. By the time a bailiff, acting on behalf of an unsecured creditor, C, tries to execute against B's property, D has paid the purchase price in full by transferring the monies to B's bank account. Neither E nor B has paid anything.

Questions

1. (a) Who is entitled to the monies paid to B by D? Can the bailiff execute against those monies (that is to say, B's bank account as a whole)?

2. (b) Who can claim payment from E? Can the bailiff execute against the claim arising out of the sub-sale?

3. (c) Could A get a better right to the claims arising out of sub-sales (for example, by using a differently worded clause or a different type of retention of title clause)? What would be the precise prerequisites? Are such arrangements commonly used?

4. (d) Instead of an unsecured creditor trying to execute against B's property, B becomes bankrupt. What are the answers to parts (a), (b) and (c) in that situation?