| Retention of Title Clauses ? Don?t Sell Goods Without Them! |
| How often do you sell goods to a customer who subsequently goes into administration or liquidation?
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Rather than a meagre dividend being received as an unsecured creditor, and writing off the balance, losses can be avoided by recovering the goods. This can be achieved by incorporating a ?retention of title? clause in the contract.
Under sale of goods legislation, property passes when parties intend it to pass. To clarify the parties? intentions, and to avoid costly argument, a ?retention of tile? clause can be incorporated into a sale contract to expressly provide that property in the goods does not pass until the occurrence of a specified event ? usually the payment of money ? notwithstanding delivery of the goods.
A simple clause can provide that the seller retains title to the goods until payment in full is received from the purchaser.
More comprehensive clauses are available to provide to the seller rights:
- To claim the proceeds of sale by a purchaser after the goods have been on-sold to a third part; and
- To enter onto a purchaser?s property to recover the goods.
A retention of title clause must be incorporated into the contract at the time it is formed. The written terms should ideally be incorporated into the supply agreement documentation or supply quotation.
The precise wording will vary in each particular case and will depend on many factors, including the nature of the goods sold, their potential use by the purchaser and the circumstances in which they are stored.
With our experience as Registered Company Liquidators we can readily assist in reviewing your recovery potential.
Is there any point in selling goods if you don?t receive payment? Here is an effective way to ensure success.
11th-December-2003 |
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