Commercial Law – Steamship Co Ltd Case Study

Steamship Co Ltd are looking to expand and diversify their fleet of steamships to offer cruises. They enter in to several transactions to expand the fleet, these include:

(a) A contract for sale for 4 vintage railings with the local antique company, Thrifty Ltd

(b) A contract for sale for 80 meters of decking with a multinational wholesaler, Decks a’hoy plc

(c) A contract for sale of 5 crystal chandeliers to hang in the ball rooms of each new vessel, purchased from Elegance Fittings Ltd

(d) A contract for oil to be made in to diesel to power diesel engines amongst the diversified fleet.

They enter in to two separate transactions: One to acquire the amount of oil they need one, with Great Texan Oil LLC; and one with Diesel Makers Ltd to manufacture the oil in to diesel.

Steamship Co Ltd go insolvent having not paid for the goods and are faced with the following competing legal claims to the goods.

(1) In respect of the 4 vintage railings it transpires that Thrifty Ltd only had a possessory title to the goods at the time of sale because the vintage railings had not been paid for. The vintage railings are being claimed by the original owner, Railings Store Ltd. Thrifty Ltd have since said they will pay Railings Stored Ltd the money owed.

(2) The 80 meters of decking is yet to be delivered. It remains in the seller’s warehouse with the Decks a’hoy’s plc other stock. All the stock in that warehouse has been sold. Decks a’hoy are claiming ownership of the decking.

(3) Steamship Co Ltd are contacted by Crystal Suppliers Ltd who inform them that Elegance Fittings Ltd were a rogue company who had paid them with a worthless cheque. Crystal Suppliers Ltd had not dealt with Elegance Fittings Ltd before but had completed the contract via e-mail. They are claiming ownership over the crystal chandeliers.

(4) The contract with Great Texan Oil LLC contained a retention of title clause over the oil and stipulated that the property in the oil would not pass until all monies had been paid. However, the contract also provided that the oil would be manufactured in to diesel. Great Texan Oil LLC now wish to claim ownership over the oil. When arriving on the premises they find that half of the oil sold has been used in the manufacturing process and is now formed part of Steamship Co Ltd diesel stock. One quarter is mixed with other oil from other suppliers. The final quarter was resold to a local purchaser with the proceeds of that sale, £1,000 now in Steamship Co Ltd bank account.

Advise Steamship Co Ltd whether they can claim ownership over the disputed goods, the money in the bank account, and advise if they have any claims against the sellers of the goods.

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