The Basics of Retention of Title

There are several different types of retention of title clauses. Each type is designed to cover a different situation or set of circumstances. Here are the main types :

Basic – The seller retains ownership of the goods until the buyer has paid for them in full

All monies – The seller retains ownership of the goods until the buyer has paid for them in full and fulfilled any obligations surrounding their sale that have been previously agreed with the seller

Proceeds of sale – This clause gives the seller rights over the proceeds of the sale of their goods when they are sold on by the buyer to a third party

Mixed goods  – This clause allows the seller to retain limited title over some of the components that have been sold to and used by a buyer to manufacture other, new products

A retention of title clause is designed to give the seller priority for payment over all of the buyer’s other creditors. Should the buyer not pay for their goods because of insolvency or another reason outlined in the clause, the seller will have some protection. Not all retention of title clauses can be enforced by the courts, which is why you need to ask your lawyer about which type of clause you should include in your contracts.

For more information and guidance about retention of title clauses refer to the Your Responsibilities section. You can also contact our legal team on 0207 381 8111 or via the email form at this link.