Hendy Lennox (Industrial Egines) Ltd v Grahame Puttick Ltd [1984] 2 All ER 152
Sale of goods; passing of ownership; retention of ownership clause; joining chattels to chattels.
Facts: Hendy Lennox (Industrial Engines) Ltd (HL) sold diesel engines to Grahame Puttick Ltd, and included a 'retention of title' clause in the contract. The clause stated that the engines would remain the property of HL until the price was fully paid. The engines were purchased by Grahame Puttick so that they could be incorporated into generating sets to be sold to customers. Grahame Puttick took possession of the diesel engines, and incorporated them into the generating sets. But before they had paid the full price for the engines, the business went into receivership.
Issue: Were the diesel engines still the property of HL despite being incorporated into generating sets?
Decision: The diesel engines were still the property of HL and HL was entitled to retake possession of them.
Reason: It was significant that the process of incorporation did not actually alter or destroy a diesel engine. It was simply connected, using bolts and other connections, to items like a generator and a fuel tank. The engine would not be changed physically by being incorporated into the generating sets; the connections could be undone and the engine removed within a period of hours. They therefore continued to exist as engines, albeit connected to other things. Note: the court observed that HL would not have been entitled to retake possession of the engines once Grahame Puttick's customers had purchased and gained title to them.