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TOOL AND MOLD MAKERS - COLLECTING PAYMENT By: James M. Dworman Tool makers and mold makers no longer must hold their products hostage in order to obtain payment for their work. Thanks to the Michigan Legislature, makers and users of molds and special tools now have new weapons in their legal arsenal. Recent passage of the Special Tools Lien Act and amendment of the Molder’s Lien Act have created new liens with respect to tools used in the manufacture of metal products, and expanded the availability of liens for makers or users of plastic molds. With the Special Tools Lien Act, effective June 27, 2002, the Legislature created liens in favor of entities who design, develop, manufacture or assemble special tools, which are defined as any tools, dies, jigs, gauges, gauging fixtures, special machinery, cutting tools or metal castings. The Legislature also created a lien in favor of entities who use special tools as part of their manufacturing process. In order to protect such a lien, a special tool builder must permanently record on every special tool it fabricates, repairs or modifies the tool builder’s name, street address, city and state, and file a UCC financing statement. Tool builders possess a lien for the amount that the tool builder’s customer owes for the fabrication, repair or modification of the special tool. Users of special tools have a lien based on possession of the tools for the amount due from their customer for work performed using the tool. An end user may retain possession of the tool until the amount due is paid. Similar provisions exist for the builders and end users of plastic molds. Before March 1, 2002, mold makers and end users were entitled to possessory liens. The 2002 amendment to the Molder’s Lien Act continues the availability of possessory liens for end users but allows mold builders to maintain a lien by permanently affixing their name, street address, city and state on the mold itself and by filing a UCC financing statement. Previously, a mold builder only had a lien based on possession of the mold, which often led to molds being held hostage for payment. These laws allow the makers of molds and special tools to deliver to their customers possession of the tools and molds in advance of payment. Mold and tool builders now have the ability to foreclose on their liens and repossess the molds and tools through a simple claim and delivery lawsuit. This typically will prove to be an effective collection mechanism because such molds and tools generally are critical to a customer’s production schedule. The possessory liens afforded to the users of molds and special liens prevent customers from moving jobs to other suppliers without payment for work performed. The new laws also provide for the sale and disposal of liened molds and special tools, as well as the respective priority of liens against molds or tooling. Questions regarding contracts involving the manufacture or repair of molds or liens, or the production of parts using molds or liens, should be directed to your Dean & Fulkerson attorney. |
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