Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25
Citation:Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25
Rule of thumb:When does movable property convert into a new form of movable property? Once significant alterations have been made to it.
Judgment:
The basic facts of this case were that Borden manufactured chipboard resin. Scottish Timber Productions Ltd manufactured solid chipboard goods. Borden had a retention of title clause for the chipboard resin. Scottish Timber went into liquidation. It was discovered that there was no raw chipboard left, and that it had all been converted into solid chipboard – with and coating etc. Borden argued that all of the ingredients could be broken and down and valued and that they were due their percentage share of whatever the chipboard resin was. The Court held that the new, hardened chip board was a wholly new product and that the retention of title clause did not apply to it, ‘The lesson to be learned from these conclusions is a simple one. If the seller of goods to a manufacturer, who knows that his goods are to be used in the manufacturing process before they are paid for wishes to reserve to himself an effective security for the payment of the price, he cannot rely on a simple reservation of title clause such as that relied upon by the plaintiffs. If he wishes to acquire rights over the finished product, he can only do so by express contractual stipulation’. LJ Bridge
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