Ownership of goods usually transfers to the buyer on delivery. However, under a simple retention of title (ROT) clause, ownership stays with the supplier until payment is made, and under some clauses it only passes when any other money owing is also paid.
How do you go about enforcing ROT rights when a customer fails? The key is to act quickly. You may hear on the grapevine or directly from an insolvency practitioner (IP) that X Ltd has “gone down”.
Your immediate thought may be to send a van round straight away to pick up “your” goods. First hurdle will be to gain access to the premises where the goods are stored. In most cases this is a matter of persuasion – if you don’t look like succeeding on this then it’s probably more effective to switch the debate back to establishing ownership and negotiating from a distance.
You’ll have to be able to identify “your” goods from other goods – both those also purchased from you the title to which has passed to the buyer and those acquired from other suppliers. Are there serial numbers or codes on the packaging? Is the customer prepared to admit that stock was always use on a first in/rota basis, and can you get them to say what volume they hold? Is there still sufficient volume of your product present and unused?
You’ll need to be able to prove to the IP that your ROT clause was incorporated into the contract. Be ready to fax evidence to the IP.
If the customer is in administration (as opposed to liquidation or receivership), your ROT rights cannot be exercised unless the administrator or the court agrees. Suppliers of key products are in a better position than others here, even for short-life goods.
copy; S Calnan 2009