What can you do when one of your customers has gone into insolvency and you are aware they still retain goods you have supplied which remain unpaid? You can consider making a Retention of Title (“ROT”) claim to attempt to recover such goods, this is on the proviso that you have a ROT clause incorporated in your contract with your customer.
ROT claims give rise to numerous problems including:-
(a) issues as to the incorporation of ROT clauses;
(b) issues as to the construction of ROT clauses, and the related process of characterising or categorising such terms;
(c) issues as to which claims an administrator or liquidator of a company should allow, in particular in instances where the goods have been altered, mixed or manufactured into another form, and claims to proceeds of sub-sales;
(d) issues as to impact of such clauses on third parties, in particular sub-purchasers; and
(e) practical issues, including office-holder liability and procedural matters.
Many ROT disputes will turn upon whether the seller has successfully incorporated its standard trading terms, including the ROT clause into the contract of supply to the customer. Any such clause should be communicated to your customer in advance of the contract being concluded. It is established law that if your trading terms only appear on your invoice then it is going to be very difficult to prove incorporation unless you can show an extensive prior course of trading governed and accepted on your trading terms.
There are many different types of ROT clauses. In majority of cases, we deal with either “simple” ROT clauses (title or ownership of the goods is reserved to the seller until that particular consignment of goods has been paid for) or “all monies” clauses (where title or ownership to all goods supplied is retained by the seller until all debts owed by the customer have been paid). The modern “all monies” clauses dispenses with the need to identify particular goods with particular contracts so they are generally the preferred option to be included in standard trading terms for suppliers.
Cases have generally been successful where claims to the (unaltered) goods themselves are advanced and the goods can be easily identified. However, often the practicalities can defeat a ROT claim. Usually, the goods themselves can only be repossessed by the seller if they can be identified with sufficient certainty, either because of distinctive packaging or marking, serial numbers or perhaps that supplier is the only one (or one of very few) who supplied such goods to the customer. You may face difficulties if your goods cannot be identified distinctly in such a manner. Furthermore, if your goods have since been sold to a third party or subject to a Landlords’ lien (which may arise if your customer owed rent or other charges to their Landlord on rented premises) then your chances of recovering your goods is significantly reduced.
If you need any advice on your retention of title clause or indeed claim please feel free to contact Nick Brown on firstname.lastname@example.org or 0151 650 6836.