UCC Filing Procedures for Protecting Customer Owned Injection Moulding Tools
Protect customer injection molds by filing UCC-1 protective bailments and securing bank subordination waivers before placing steel at a supplier facility.
Protective Bailment
Meaning
Legal arrangements establish a custodian’s duty of care over property owned by another party without transferring ownership. Tooling contracts often include a protective bailment to govern the relationship between an original equipment manufacturer and the injection moulder holding the production dies. This agreement clarifies that the moulder holds the injection moulds solely for the purpose of production and must return them upon request.
Asset Security
Detailed registries prevent confusion regarding the ownership of expensive steel and aluminum tooling. Because high-cavity moulds represent substantial capital investments, the customer must ensure that the moulder’s creditors cannot seize them during a financial restructuring. The document isolates the customer’s property from the manufacturing facility’s general assets, making it clear that the moulder has no equity in the tooling.
Operational Custody
Injection moulders must maintain the tools in good working order while they remain in the production bay. This responsibility includes routine cleaning, lubrication, and minor repairs during the production run. If the mould sustains damage through negligence, the bailment terms outline the liability and repair costs.
Risk Allocation
Insurance coverage must be maintained by the custodian to protect against fire, theft, or catastrophic damage. This protective contract ensures that both parties understand their financial obligations before production begins. It establishes a clear framework for long-term manufacturing relationships.