Archivent sold some ventilators to R Co who were main contractors for the construction of a primary school which they were building for the Strathclyde Regional Council. The main contract incorporated the JCT standard form of building contract 1963 Edition. Clause 2(3) of the contact between Archivent and R Co provided that until payment of the price in full is received by the company, the property in the goods supplied by the company shall not pass to the customer’. The ventilators were delivered to site in June 1979 and their value was included in an interim certificate issued pursuant to the main contract in July 1979 and paid by the Strathclyde Regional Council shortly thereafter. R Co went into receivership in September 1979, Archivent not having been paid for the ventilators. Archivent claimed against the Strathclyde Regional Council the delivery up of the ventilators or, in the alternative, their value contending that by virtue of clause 2(3) of their contract with R Co property in the ventilators remained with them throughout.
Held That clause 2(3), the retention of title clause, was a sale made under a suspensive condition. Because R Co had obtained possession of the goods with the consent of Archivent; because R Co had disposed of the goods to the Strathclyde Regional Council (when the goods had been measured and valued on site) who had received the same in good faith and without notice of any right of the original seller in respect of the goods; and because R Co had acted in the ordinary course of business as a mercantile agent with ostensible authority, then s.25(1) of the Sale of Goods Act 1979 applied to confer good title in the goods upon the Strathclyde Regional Council.