October 31, 2011
In February of this year, we advised you about the importance of protecting your business by putting in place effective and properly incorporated retention of title provisions.
Under retention of title provisions your goods will remain yours, until the goods have been paid for in full.
You are able enforce effective retention of title provisions against liquidators and administrators and take steps to prevent them from dealing with your goods in absence of payment for your goods in full. If you cannot reach an agreement with the officeholder and provided that you can evidence incorporation of your retention of title provisions, then injunctive relief to prevent the officeholder from using your goods without payment may be available. Alternative, you may have a claim for damages for wrongful interference with your goods.
The importance of correctly drafted retention of title provisions and understanding your provision, was highlighted by a recent decision of the Court of Appeal, when a manufacturing of clothing brought an unsuccessful claim for damages against an administrator of a retailer of women’s fashion garments.
The manufacturer claimed that the administrator had unlawfully interfered with its goods by delivering its garments to a purchaser of the retail business as a going concern. The Court disagreed with the manufacturer and in reaching its conclusion relied on the a term within the Retention of Title provision that gave the manufacturer the right to serve notice on the retailer to prevent it from selling or parting with possession of the goods, if the retailer became subject to formal insolvency proceedings.
The manufacturer had not served such notice and accordingly the administrator had been entitled to sell and part with possession of the goods. The manufacturer remained entitled to receive payment for his goods, but as an unsecured creditor of the company in administration.
For further advice or to arrange a free review of your terms and conditions, please contact Petra van Dijk at pvandijk@se-law.co.uk or Hitendra Patel at hpatel@se-law.co.uk.
