- Format Ltd (F) is in the business of manufacturing a wide range of industrial products made from rubber. It enters into the following contracts:
a. on 15 January, F contracts with Rorun Ltd (R) for the supply to R of 500 metres of rubber trim to be used in the manufacture of seals for oil containers. The rubber trim is delivered to R on 1 February, payment to be made on 15 February. The contract contains the following clause:
‘all goods supplied under this contract by F shall remain the property of F, whether or not incorporated into other products and sold, and if the goods, or any other products incorporating the goods are sold, the seller shall retain beneficial and equitable title in any proceeds of sale until such time as all outstanding sums owed to the seller are paid’
On 20 February F, who has not been paid by R, discovers that R is insolvent. R has used 50 metres of the rubber trim to make the seals. Both the seals and the remaining trim are still in R’s warehouse.
b. F makes a contract with Polysome UK (P) to buy 250 litres of liquid silicone stored in Vat One which contains 1,000 litres. F pays for 100 litres with the remaining payment and delivery to take place on 2 March. On 15th February P calls to tell F that P is insolvent.
c. F contracts with Selond Ltd (S) for the purchase of 200 metres of rubber sheeting at the price of £10 per metre. F needs the sheeting for manufacturing door mats used specially for factories. Delivery is made on 4th April. On 2nd October, F finds that although the sheeting can be used to manufacture door mats for domestic use, it is not strong enough for making door mats for industrial use in factories. On 4th April, due to the high demand for rubber sheeting, the market price increased to £15 per metre. On 2nd October, there is only one alternative supplier to sell the same type of rubber sheeting at the price of £20 per meter.
Advise F on its legal position in relation to the three transactions.