Retention of title
This is where the supplier retains ownership of the goods until all debts have been paid or any other obligation is met.
You may want to include a provision that the goods may not be used in any such process without your prior consent.
Legal and beneficial title should be reserved to the seller. What is the purpose of a retention of title agreement?
Retention of title clause construction
The RoT should include the right of the supplier to enter on the premises of the purchaser for the purposes of repossessing the goods. Where the OR has seized items as the insolvent's property and subsequently becomes aware of a possible claim, the goods should not be sold before deciding upon the validity of the claim. The OR may reject a claim where the supplier is unable to prove this. Has the retention of title clause been properly incorporated into the contract? There have been a number of cases where the courts have held that certain proceeds of sale clauses create a charge by the buyer in favour of the seller which is void if it is not registered at Companies House. The methods used by suppliers to inform the insolvent of their terms of business will vary. An 'all sums' clause may also require the creation of a legal charge, which may be valid even if it is not registered. The clause will be valid if it was included on an invoice delivered to the insolvent prior to the goods, as the delivery of those goods being construed as the buyer's acceptance of the terms of the contract. It is possible to include provisions in the retention of title clause which provide that where the buyer sells goods to a third party before the seller has been paid for such goods, the seller can claim the money owed to it from the proceeds of sale received by the buyer from the third party purchaser. A ROT clause in a contract is evidence that the parties did not intend property in the goods to pass to the buyer prior to full payment, even though the goods have been delivered to the buyer or to a carrier or custodian for the buyer.
To obtain a prompt response it may be desirable to give the supplier a fixed time in which to respond, but at the same time, it should not be assumed that no response means that the supplier has no claim. The goods are no longer identifiable Goods may no longer be identifiable where they have been used and as a result lose their original identity, for example in a manufacturing process.
The questionnaire asks for specific information regarding the goods claimed under a clause in the contract and for documentary evidence in support of the claim.
Where the OR has seized items as the insolvent's property and subsequently becomes aware of a possible claim, the goods should not be sold before deciding upon the validity of the claim.
Where such a clause is valid, the OR does need to ensure that the goods being claimed relate to an unpaid invoice, as the supplier may have a valid claim to any goods supplied by him that are still with the insolvent.
The seller may also reserve the right of disposal of the goods after their delivery to the buyer until certain conditions are met. If the goods can be separated, then a correctly worded retention of title clause should mean that the seller retains title to the goods.
Retention of title tort of conversion
The law on enforceable retention of title clauses is constantly changing. Without a RoT it is likely you will rank with other unsecured creditors in the insolvency proceedings and as such are unlikely to get all, if indeed any, of the monies you are owed. This is where the supplier retains ownership of the goods until all debts have been paid or any other obligation is met. However, if the goods have been used in such a way that the original goods no longer exist, for example, where the seller supplies the buyer with resin which is used in the manufacture of chipboard, the resulting new product the chipboard will belong to the buyer and any retention of title clause which purports to reserve rights in the new goods to the seller which will be ineffective without registration. Regardless of the method used to enter into the contract any subsequent changes to that contract may be made in writing or orally but must be agreed to by both parties. The questionnaire is intended to assist the official receiver and so can be amended to establish the appropriate facts required within each case. Where the OR has seized items as the insolvent's property and subsequently becomes aware of a possible claim, the goods should not be sold before deciding upon the validity of the claim.
It is possible for a supplier to combine several types of clause, so that if the official receiver decides that one part of the clause is invalid, the supplier may still be entitled to recover the goods under another element of the clause.
based on 116 review