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In the current economic climate it is important to ensure you continue to own the goods you sell until you are paid in full. Robert Capper, Head of the Commercial Department at Harrison Clark Solicitors, suggests every company selling goods should check their contracts include a retention of title clause as well as taking advice to ensure that the clause is enforceable and the level of cover it provides is adequate.

Robert explains

“A retention of title clause is an essential part of a sale of goods contract. The clause effectively delays the transfer of ownership of goods to the buyer until a specified event, usually payment in full, has occurred. This grants protection to the seller as, should the buyer become insolvent, the seller will rank above any secured and unsecured creditors who would otherwise be paid their debts ahead of the seller.

“When considering whether this will be practical for you it is important to note that the goods must be identifiable and the clause must clearly state that the seller remains the legal owner of the goods until the specified event occurs.

“Similarly, care must be taken where goods are delivered in consignments. If you are not paid for a specific consignment you cannot reclaim that consignment unless you can identify the specific goods included in it. Standard retention of title clauses do not usually provide protection from this problem and so you should ensure that your clause contains a well drafted 'all monies' provision.

“This protection can be extended or strengthened by, for example, requiring the buyer to store your goods in a separate storeroom, providing you with a right of entry to the buyer's premises and granting you the right to seize goods (including detaching them from a manufactured item) for which you have not been paid.

“Finally, every retention of title clause should ensure the buyer is liable in the event of accidental loss or damage to goods, even while you retain title. Ordinarily goods would remain at the seller's risk until title passes to the buyer however, as you relinquish control (but not ownership) of the goods, this is obviously not desirable. It should therefore be clearly stated that risk will pass to the buyer on delivery. To further protect yourself, you could require the buyer to insure the goods.”

Robert concludes,

“The law on retention of title continually evolves and, given the current climate, it is important to ensure your terms are regularly reviewed to ensure they can be enforced and that they provide the protection you need.“


For any advice on your contractual terms or further information on how your retention of title clause can be bolstered Robert Capper of Harrison Clark would be happy to hear from you, either by phone on 01905 744814 or by email to rcapper@harrison-clark.co.uk Alternatively you can speak to Elizabeth Patrickson Tel (direct): 01905 746467



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