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Retention of Title

If you provide goods to a customer you should include a provision in your terms and conditions of sale that entitle you to retain ownership of those goods, irrespective of whether you still hold possession or not, until payment is received in full.

This is called a “retention of title” clause and needs to be quite specific to have any meaningful effect. If drafted properly it could be enforced against a debtor company, even if insolvent, to recover your goods.

If a customer becomes insolvent and you have a retention of title clause in your terms and conditions then you must act promptly to distinguish the goods as yours so that they are not sold and the proceeds distributed without your approval.

In some circumstances if the goods are for an end user it may be possible for you to negotiate with them directly to discharge some or all of the sums due to you. Retention of title is a good way to maintain leverage over the debtor to encourage payment of your invoices while allowing you another opportunity to re-sell those goods.

By omitting this clause from your terms and conditions you are leaving your business exposed. Our commercial department can assist in reviewing your terms and conditions and drafting the appropriate retention of title clause to increase your chances of retaining ownership of the goods provided until payment is received.

I would recommend that you regularly and carefully review your terms and conditions of trading to ensure that they are relevant and enforceable. If you are forced to litigate, a well prepared and comprehensive set of terms and conditions will vastly improve your chances of succeeding at a trial or achieving a settlement.

If you have a “retention of title” clause in your terms and conditions and a debtor is depriving you of your right to recover these items then you may wish to make an application to Court seeking an injunction to prevent them selling these items and for an order to deliver up these goods to you.

If you require such assistance please contact the Commercial Dispute Resolution team who can assist in this regard. Prompt action is imperative if you are to stand the best chance of protecting your position. To delay is likely to put pressure on your business and may ultimately risk you having to write off these debts.

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