Hull Imports PLC is an importer of iron bars. In November 2017 Hull Imports PLC entered into a contract with Leeds Steel Ltd to sell iron bars to Leeds Steel Ltd. Under this contract Hull Imports PLC makes monthly deliveries of iron bars to Leeds Steel Ltd.
Hull Imports PLC is Leeds Steel Ltd’s sole supplier of iron bars. Leeds Steel Ltd uses the iron bars to manufacture stainless steel, which it sells to its customers.
The contract between Hull Imports PLC and Leeds Steel Ltd includes the following two terms:
“10.1 All goods delivered by us remain our property (goods remaining in our ownership) until all debts owed to us including any balances existing at relevant times – due to us on any legal grounds – are settled.”
“10.2 Should the goods become constituents of or be converted into other products while subject to our ownership we shall have the equitable and beneficial ownership in such other products.”
Leeds Steel Ltd has not paid Hull Imports PLC for the last five monthly deliveries of iron bars.
Under a contract for the sale of machine tools, dated 1st September 2019, Leeds Steel Ltd owes Sheffield Cutlery Ltd the sum of £25,000.
On 2nd November 2019 Leeds Steel Ltd entered into a contract to sell stainless steel bars to Sheffield Cutlery Ltd. Payment for each delivery to be made 60 days after the delivery. Leeds Steel Ltd is Sheffield Cutlery Ltd’s sole supplier of stainless steel. Under this contract Sheffield Cutlery Ltd has taken 13 deliveries of stainless steel bars from Leeds Steel Ltd.
The contract dated 2nd November 2019 between Sheffield Cutlery Ltd and Leeds Steel Ltd contains the following clause:
“A5. The seller shall not without written consent of the buyer assign this contract, or monies due under this contract.”
Sheffield Cutlery Ltd has used eleven of these deliveries of stainless steel to manufacture cutlery. Two of the deliveries remain as stainless steel bars in Sheffield Cutlery Ltd’s warehouse.
Under this contract Sheffield Cutlery Ltd currently owes Leeds Steel Ltd payment for three of the deliveries, a sum of £15,000.
On 25th November 2020 without informing Sheffield Cutlery Ltd, and without seeking their consent, Leeds Steel Ltd assigned in writing the debt under the contract with Sheffield Cutlery Ltd (£15,000) to Poppleton Debt Recovery Ltd.
Poppleton Debt Recovery Ltd gave notice of this assignment to Sheffield Cutlery Ltd on 2nd January 2021. Poppleton Debt Recovery Ltd is now demanding the sum of £15,000 from Sheffield Cutlery Ltd.
Leeds Steel Ltd is now insolvent.
Advise Sheffield Cutlery Ltd:
1). Who owns (a) the steel bars, and (b) the manufactured cutlery which are in Sheffield Cutlery Ltd’s possession?
2.) Does Sheffield Cutlery Ltd have to pay Poppleton Debt Recovery Ltd any sum of money?