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Legal 500 | 2020 Edition

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Retention of Title Clauses

A frequently asked question:

‘’If my customer enters the insolvency process (administration or liquidation) or it is believed that they may do so shortly, and has not paid for the goods provided by me but has sold them on to another business, can I recover the debt due to me from the business that is holding the goods that I originally supplied?’’

The answer is ‘Yes’ but only if there is a Retention of Title Clause included in the supplier’s Terms and Conditions.

What is a Retention of Title Clause?

An all monies Retention of Title Clause is enforceable where a supplier of goods has stipulated within its Terms and Conditions, clearly set out in the contract entered into with the customer, that it retains the full title (i.e. ownership) of those goods until they have been paid for in full.

The main advantage of a Retention of Title Clause is that it provides the supplier of the goods with priority over secured or unsecured creditors of the customer if the customer becomes insolvent.

How Can We Help?

We provide advice, assistance and representation in relation to all issues involving Retention of Title Clauses to a wide range of clients including:

  • Company directors, shareholders and members
  • Creditors
  • Insolvency Practitioners

We understand that the law and procedure on such issues is involved and complex. We use our experience to deliver fast, cost-effective solutions to our clients.

Feel free to call us for an initial no obligation confidential discussion:

What specific terms need to be included in a Retention of Title Clause?

  • A right for a supplier to enter a customer’s premises to repossess the goods. If this right is not included in the Retention of Title Clause, a supplier could be guilty of trespass.
  • An obligation on a customer to store the supplier’s goods separately from all other goods supplied by third parties and for the goods to be clearly marked as belonging to the supplier.
  • A right for a supplier to enter the customer’s premises to verify that the above-mentioned storage and marking obligations are being complied with.
  • A ‘trigger event’, that could be something short of formal insolvency, which would allow a supplier to enter the customer’s premises and repossess the goods.

What must the supplier remember to do?

  • The supplier must ensure that the Terms and Conditions are supplied to a customer each and every time an order is placed.
  • A Retention of Title Clause can only be enforced if it is incorporated into the supplier’s written Terms and Conditions.
  • The onus is on the supplier to evidence that a valid Retention of Title Clause forms part of the Terms and Conditions of each and every transaction.

When should a Retention of Title Clause be used?

A Retention of Title Clause is common where:

  • the goods are not quickly perishable
  • the goods are not likely to be used in a manufacturing process immediately
  • multiple orders have been delivered – the supplier may claim back any goods, clearly marked as being owned by the supplier, irrespective of certain goods delivered under varying orders having already been paid for.

What if there is no Retention of Title Clause?

Without a Retention of Title Clause, a supplier will rank as an unsecured creditor upon any insolvency.

Unfortunately, this will be the position with many suppliers.

What is the position of an Unsecured Creditor?

The ability of an unsecured creditor to recover the debt owed to it will be dependent upon the level of assets available for realisation (i.e. to be collected and sold) against the level of assets that the insolvent company may have.

It is possible that the unsecured creditor may receive:

  • all of its outstanding liability,
  • a pro-rata sum, or
  • Nothing.

How We Can Help You

Our team of insolvency lawyers is experienced in dealing with all issues regarding Retention of Title Clauses, secured creditors and unsecured creditors.

We are used to working with and against Insolvency Practitioners in such circumstances.

Who Can I Contact For Help? 

We welcome new enquiries by telephone or email.

Our team of expert lawyers is here to guide you in relation to any issues arising from Retention of Title Clauses.

We are happy to provide an initial no obligation confidential consultation at our offices in London, Birmingham or Manchester or via video conferencing facilities.


Mr Stuart Southall | Head of Insolvency Team
0121 449 9888 | 020 7936 6396

Mr Tim Thompson
020 7936 6396 | 0121 449 9888

Mr Naz Maqsoom
0161 817 5020 | 0121 449 9888


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