Do retention of title clauses work in recovering your goods?

Year Published: 2014

Retention of title clauses are a very powerful tool if used in the appropriate circumstances. Many terms and conditions contain them, however the big question is ‘are they actually useful?’

If you are selling goods in the course of your business you should make sure that there is a retention of title clause in your contract. This will enable you, in the event that the company or person doesn’t pay for the goods, to recover your goods from the defaulting company or person and assist in recovering your losses. This is even more important if the company or individual becomes insolvent and there is no hope of recovering any money directly from your buyer.

Whilst retention of title clauses sound good in principle, they do not always work. If your goods have been changed or ‘mixed’ to make another product, for example you provide the glue that is ‘mixed’ with wood chips to make chipboard (the end product), then in this instance your retention of title clause, in respect of the glue, will not be effective. This is because your original product, the glue, cannot be extracted in its own right. This is often the case with component type products.

In short, retention of title clauses are good to have in your terms and conditions and they are useful in some cases, but do not rely upon them as your sole method of credit control. It remains vital to have robust and effective credit control policies in place.

For further information, please contact Kaye Whitby in the Commercial team on 0844 391 5830.

 

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