In November 2014 the Insolvency Practitioners Associations released a new guidance paper on how Retention of Title claims are handled within an insolvency situation.
Here, Molly Monks of The Business Debt Advisor provides a basic guide to Retention of Title (“ROT”) and its uses.
What is Retention of Title?
A clause stating that title to goods supplied will remain the property of the supplier until monies owing have been paid.
Who can it benefit?
It can give protection to anyone who supplies goods, typically used in the trade sector.
Is it as simple as “mine until you pay”?
No, the ROT clause must be accepted and incorporated into the contract or invoice. It must also be done prior to the supply taking place. That said, if there has been lengthy dealings between the customer and the supplier involving numerous transactions, it can be argued that over the “course of dealings” the customer should have become aware of the terms of trade which could include retention of title.
What types of clauses are there?
There are two ROT main clauses:-
- A simple clause – this clause provides that goods supplied under a specific invoice remain the property of the supplier until all goods on the invoice have been paid for
- All monies clause – this provides that all goods supplied by the vendor remain their property until all sums due to the supplier, on whatever account, are paid.
What can a supplier do to ensure that he has a valid Retention of Title over his goods?
- Ensure that the ROT clause is agreed prior to supplying any goods
- Ensure that the purchaser has agreed to the clause before supplying any goods
- Stickers! – make sure the equipment is easily identified as yours
Retention of Title can be a tricky area for any supplier and if not done correctly could end up being costly! If you would to discuss this further please contact Molly Monks on 0333 9999 617.
If your business is struggling with financial difficulties you could benefit by speaking with The Business Debt Advisor and discussing the options available to you.