Our Retention of Title Dispute Solicitors can help you draft and enforce retention of title clauses, protecting your business from potential losses.
If you are currently in the midst of retention of title dispute or would like a retention of title clause drawn up, contact our specialist civil litigation solicitors today on 0330 404 6428 or click here to request a call back from a member of our team to learn how we could help you.
What is a retention of title clause?
A retention of title clause is a clause included in a Sales of Goods act which states any goods bought on credit are the property of the seller until payment is received. Failure to include this clause means ownership of the goods transfers to the buyer upon delivery, leaving you powerless should the buyer go into administration or insolvency before invoices are paid.
The law on enforceable clauses is regularly-changing, meaning in-depth legal expertise is required to draw one up correctly. They can be drafted in a variety of forms and can be both narrow and broad, and the dramatic impact on your business necessitates expert legal advice should be sought to ensure proper implementation in your contracts.
Having a retention of title clause included provides you with much-needed security should a business you trade with go into administration by allowing you to recover all goods which have not been paid for, ensuring you’re able to recoup the majority of your potential losses.
There are many reasons a retention of title clause may become unenforceable, however, such as delivering the goods to an address other than the primary trading address of the buyer. If you already have retention of title clauses included in your contracts, you should ensure that they have been implemented correctly to avoid a nasty surprise if your buyer is unable to pay.
Types of retention of title clause
There are a number of different types of retention of title clauses, the use of which depends on the parties involved. Most commonly, they are broken down into the following:
This is the retention of title clause at its most basic, simply stating the title of specific goods is retained by the seller until the buyer has paid the invoice in full. A simple clause if the foundation of any retention of title clause, and may be enough to protect a business in many cases.
All monies clauses
Often included separately, a valid ‘all monies’ clause allows sellers to retain title of the goods sold until all monies due from the debtor have been paid. This contrasts with the order-by-order basis a simple clause works on and ensures more comprehensive protection.
Proceeds of sale clauses
In some cases, your goods may have already been sold on when the buyer goes into administration, naturally leaving you unable to recover them. A ‘proceeds of sale’ clause means you may be entitled to receive the proceeds made from the sale of goods, allowing you to recover some of your losses even though the goods have been moved on.
Mixed good clauses
If the goods supplied were used as part of a manufacturing process and mixed with items from other suppliers, your screws being used with steel from another supplier, for example, a ‘mixed goods’ clause may allow you to claim ownership over the raw materials. This is typically the most complex clause to enforce, depending on whether the goods can be separated without damaging third-party items.
The limitations of retention of title clauses
Much like any commercial contract, a retention of title clause limitations. Failure to take these into account could lead to the clause becoming unenforceable. The following limitations are the most common:
- The clause must be properly incorporated into the terms and conditions of sale of goods which exists at the time of supply. Failure to incorporate it at this time or correctly incorporate it at a later date renders the clause void
- If the clause contains provisions which are otherwise inconsistent with the trading relationship between the two parties it may be deemed invalid
- Before taking steps to recover any goods following a buyer going into administration, the seller must first obtain permission of the appointed administrators or a court order.
If you would like our team of Retention of Title Dispute Solicitors to assist you, call today on 0330 404 6428 or click here to fill in our contact form.