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Another possibility would be, of course, to charge or assign the claims arising from the sub-sales. Such a course is, however, in many cases, too burdensome because the sub-purchasers must be informed of that kind of agreement.39

One last possibility would be the use of an enterprise charge, which would include within its ambit both the claims and the monies paid by the sub-purchaser. However, an enterprise charge can only extend to half the value of the movable property of the enterprise. Furthermore, it ranks below any charge or security assignment of claims.

(d) The rules in the event of the insolvency of B would be the same.

Comparative observations

Parts (a) and (b)

On the basis of a pure sale with a simple retention of title, all reports conclude that the money paid by D to B as well as B’s claim against E are part of B’s estate. The money paid and the claim can therefore be executed against on behalf of B’s creditors. In the event of B’s insolvency, they form part of his insolvency estate; A does not have any right in preference to B’s insolvency creditors.

Part (c)

Germany is the only jurisdiction that has developed a comprehensive security right for A which survives the transformation of the raw material as well as the sub-sale of the new products. However, even the use of a combined products and proceeds clause cannot provide the seller with a watertight security right. This can be seen from the position in respect of the money already paid before execution or the commencement of insolvency proceedings. Greek law has followed the German example and -- at least theoretically -- allows the same type of security right. In Belgium and South Africa, it seems to be possible for the seller to take a charge over the claims against the sub-seller without having to comply with any formalities. Nevertheless, in practice, this does not

39As to the charge, security assignment and enterprise charge, see also Finnish report, case 6.

appear to be widely used. In Austria, the publicity requirement for security assignments may be met by a simple entry onto the books of the creditor. According to a predominant but not undisputed opinion, this is also feasible before the identity of the debitor cessus is even known. Through such a transaction, the parties in case 8 could extend reservation of title into the proceeds of sub-sale, although A has partly lost his title to B through the transformation of the cloth into curtains. This type of security assignment is widely practised.

In case 6, where the goods sold by B are still in their original state, French and Belgian law vest the claim arising out of the sub-sales in the seller if the contract contained a retention of title clause (real subrogation). In the present case, B does not sell the original goods but instead products made from them. As pointed out by the French report, this -- at least according to the point of view of the Cour de cassation -- puts an end to the possibility of real subrogation. The same is true for Belgian law.

In the remaining jurisdictions, the possibility for A to gain a right in the proceeds of sub-sale is undermined by the following rules, which have already been discussed in cases 5 and 6 and are hence only set out by way of summary. An assignment or charge is required to be accepted by the debitor cessus or formally notified to him (France, Italy, Finland, Scotland). This prerequisite cannot be met before the identity of the debitor cessus is at least known. Charges have to be registered, which again either means that it is not possible to charge future claims40 (Dutch law), or renders the whole transaction impracticable (England, Ireland). The position of Spanish law does not yet seem to be finally settled as is demonstrated by the answers to part (c) and to case 6, part (b).

The possibility in Sweden and Finland to reserve a real right in the raw materials and the manufactured goods and in claims on third parties by agreeing that the manufacture and sale will be performed for A and at his risk, i.e. with an obligation to compensate B should B not obtain compensation from payments by a customer, does not seem to be commonly used, at least not outside groups of companies. By way of contrast, a consignor under a Danish credit consignment agreement need not carry the consignee’s business risk; instead, the parties are

40That is, claims where the legal relationship out of which they will arise does not yet exist.

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only obliged to settle each transaction immediately. Nevertheless, the requirement of immediate settlement seems to render credit consignment impractical in cases like the present.

Part (d)

In no jurisdiction is there a material distinction between an execution on behalf of an individual creditor and insolvency.