Retention of Title

The Court of Appeal has delivered its judgment in Caterpillar (NI) v John Holt & Company (Liverpool) The decision settled the longstanding debate as to whether section 49 of the Sale of Goods Act 1979 provides the exclusive remedy for the price of goods or simply a statutory alternative to a common law cause of action.

Claims for the price have distinct advantages. Because they are debt claims, concepts such as remoteness, causation and mitigation do not arise, neither do questions of assessment or contributory negligence. The claim for the price can, in other words, be a quick and easy method of obtaining judgment for a liquidated sum. The defendant may then be liquidated on the basis of the claim.

Holt’s argument, accepted by Patten & Floyd LLJ, was that under such circumstances Holt only sold as agent, and was empowered to pass property direct from Caterpillar to the sub-buyer and thus it, Holt, never held property in the goods. This, Holt argued, accorded with the proper construction of the Romalpa clause, and also achieved its commercial purpose. Consistent with the foregoing, for example, the usual remedies afforded to the seller when a buyer in possession under section 25 of the 1979 act sells on, is not a claim for the price, but rather for ‘conversion’. The appeal accordingly was allowed.

Rather, the case throws up the fact that, doubtless because of an accumulation of ‘boiler plate’ clauses in commercial contracts, there is scope for irreconcilable tension between provisions that are inserted to protect the seller. This case is a classic illustration. By dint of preserving property so as to protect the seller in the event of the buyer’s insolvency, the seller, doubtless unwittingly, did so at the expense of giving up any statutory claim for the price. Furthermore, because the anti-set -off clause in the present case was widely drafted in relation to the type of counterclaim that could not be set off, but narrowly drafted in relation to the claim that was protected (that is, a claim for the price properly so called) the further consequence was that the anti-set-off clause – the ‘pay now, sue later’ clause – was redundant.