Case 9: Too many toasters

(All-monies/sums clause -- effects of commingling on retention of title)

B is a wholesaler, dealing in electrical household items. He regularly buys large numbers of toasters and coffee machines from A, a manufacturer, and sells them to retailers. A and B have concluded a contract which serves as a framework agreement for all orders from B. This contract contains the following provision: ‘Each delivery has to be paid for within thirty days. In any event, the seller (A) retains title to the goods until the customer (B) has paid all sums that are due to the seller (A) under this contract.’ On 1 June, A delivers 500 toasters to B. They are stored on B’s premises, together with 1,000 identical toasters previously delivered by A, of which only 500 have been paid for. B manages to sell 500 of the 1,500 toasters before he becomes bankrupt on 1 August. He has made no payments to A since 1 June. There are still 1,000 toasters on B’s premises. It is impossible to discover to which delivery the toasters sold and the remaining toasters relate.

Questions

(a)Does A have any real right in the remaining toasters? Or any right to preferential payment out of the proceeds of sale? Do the toasters form part of the insolvency estate?

(b)Could A acquire a better right (for example, by adopting a differently worded clause or through the use of a different kind of retention of title clause)? What would be the exact prerequisites?

(c)Are clauses such as that described in the case, or under part (b), commonly used?

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