One of the ways to protect your business from the consequences of your insolvent customer's non-payment of goods is to ensure a robust and applicable retention of title clause can be relied upon. An effective retention of title clause operates so that the ownership of your goods stays with you until the goods (and in certain cases, all outstanding debts of the customer) have been paid to you in full.
Retention of title clauses can be enforced against a liquidator or administrator, who will either have to return the goods to you or make payment for the goods if they wish to use them. If you find out that your customer is about to enter into, or indeed is already in liquidation or administration, then it is crucial that you act promptly. You must inform the liquidator or administrator of the retention of title clause and take immediate steps to identify your goods. They will have no knowledge of the retention of title provision, as such, you will need to demonstrate that the provision was properly incorporated into, i.e. applies to, the contract made between your business and the insolvent customer. Without such evidence, repossessing the goods will be an uphill struggle, and all too often, the administrator is able to demonstrate that the provision was not properly incorporated into the contract.
We can assist you in your dealings with the liquidator or administrator and if necessary assist you in obtaining injunctive relief from the Court, which will prohibit the liquidator or administrator from using your goods without payment.
Please don’t wait until your customer is insolvent. Now is the time to review your terms and conditions, or indeed put them in place. A retention of title clause will need to be tailored to your individual needs and a simple process adopted to ensure that the provision is properly incorporated into the contract between you and your customer. We offer a free review of your existing terms and conditions and will be able to assist you in ensuring that you put in place retention of title clauses that will work for you.
First published in Newsbrief, Spring 2010
If you are interested to have new terms and conditions drafted, or if you would like your existing terms and conditions reviewed, then please contact Christine Jackson on 01926 880774.
If you require assistance in dealing with a liquidator or administrator in enforcing your retention of title clause, then our insolvency team can assist. Please contact Andrew Harris on 01926 880772.
