December 14, 2011
We all know that current times are tough. Taking measures to protect your business have never been more important. In addition to cost control and cash flow management, you may wish to protect 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. It is important that your retention of title provisions are correctly drafted so as to make them work for your business.
It is furthermore important that your retention of title clause applies to (is incorporated into) your contract with your customer. Merely having a retention of title provision in your standard terms and conditions is not sufficient. You must ensure that you adopt the correct process to incorporate the provisions into your contract with your customer.
Retention of title provisions cannot only be enforced against your customer, but also against a liquidator or administrator (“the officeholder”), who will either have to pay for your goods or return them.
As the officeholder will have no knowledge of your Retention of Title provisions it is important that you act with great speed, once you find out that your customer has entered into, or is about to enter into, administration or liquidation. You must immediately inform the officeholder of your retention of title provisions and take steps to identify your goods.
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.
For further advice on this subject or those relating to corporate insolvency or business recovery, please contact Petra Van Dijk on 01295 204159 or email her at pvandijk@se-law.co.uk. Additionally please contact Hitendra Patel, Company Commercial Partner, on 01295 204108 (hpatel@se-law.co.uk) if you would like to discuss a free review of your terms and conditions.
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