A boat manufacturer, Swann SpA, supplies its dealers on a consignment basis, which allows either Swann SpA or a dealer to require a boat to be returned. Each dealer has to arrange insurance for the boats held on consignment.

When a boat is sold to a customer, the dealer pays Swann SpA the lower of:

● the delivery price of the boat as at the date it was first supplied, or

● the current delivery price less the insurance premiums paid to date of sale.

If a boat is unsold after three months, the dealer has to pay on the same terms.