Their contract terms. As you know, this clause states that the

buyer doesn't own the goods until payment is made. Thus if

The buyer goes out of business before paying for the goods,

The supplier can recover the goods.

If the clause is drafted badly, it may be treated as a charge.

This means that, as a charge, it should be registered at

Companies House. If the supplier fails to register a charge, it's

generally void and can't be enforced. That's why lawyers

Drafting such clauses should do their best to ensure that the

clause doesn't become a charge. If a supplier has a high-value

contract, it's a good idea for him to make the effort to register

the clause as a charge. It doesn't cost anything, and it's a very

Sensible thing to do. However, in most cases, where hundreds

Of sales of goods are made each day, registering each one

Under company law is just not feasible.

Well, now I'd like to give you five useful tips for drafting

Retention clauses.

Part II

Well, now I'd like to give you five useful tips for drafting

Retention clauses.

First of all, a good clause should be written clearly. It should

explicitly state that ownership, or title, in the goods won't pass

To the buyer until the goods have been paid for.

A second thing to keep in mind is the fact that the clause should

Also include the requirement that the buyer of the goods must

Store the goods separately from other goods. The goods should

Be clearly labelled as the property of the supplier until payment

For them has been made. The reason for this is that liquidators

ask for proof that those goods have not been paid for. So it's

Enormously helpful to make sure that the product serial number

Printed on the invoice is also written on the goods.

A third point: I would recommend that the clause includes

wording to the effect that the buyer agrees that he won't resell

the goods until they've been paid for. Remember that there'll

Be a greater risk that the clause amounts to a charge if the

buyer has the right to sell the goods before the seller's

Received payment for them.

I now come to my fourth point. Another thing to take into

Consideration is what the buyer will do with the goods. If the

buyer intends to use the goods in a way that'll result in their

losing their form, this means they can't be recovered, and so

The clause may be void. In one case, the product was a

Chemical, an ingredient used to make another product, and the

Court held that once it was used in the manufacturing process,

A claim over the finished product under the retention of title

Clause was invalid because the original product no longer

Existed. So when the seller tried to claim rights over the

Resulting product, he was claiming rights over additional

Property. This, of course, meant the transaction was a charge.

In another case, retrieving the product was possible - it was

Attached to the floor of a building - and so it could be

Retrieved by unscrewing. In that case, the clause was valid.

My fifth and final point is the issue of recovery of the goods. A

Well-written clause will say that the supplier has a right of entry

Date: 2015-12-11; view: 1208