Case 6 - Motor cars supplied and resold (II)

Summary

(Retention of title and resale – claim arising out of sub-sale still existing)

A is a producer (or importer) of cars. As in case 5, he sells five cars to B, a licensed distributor. The contract allows B a period of forty-five days before payment has to be made. It also contains the following clause: ‘The seller hereby retains title to the cars delivered under this contract. The buyer, however, is entitled to resell the cars in the ordinary course of business.’ Two weeks after delivery of the cars, B has already managed to sell them to various customers (C1–C5), who have taken them away immediately. Before anyone has paid anything, B goes bankrupt.

Questions

1. (a) Who can claim payment from C1–C5? Is it A or is it B's insolvency administrator?

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

Discussions

GERMANY

(a) Since the contract does not contain an anticipatory assignment of the claims arising out of the sub-sales (see infra, part (b)), it is the administrator who is entitled to claim payment from the customers.