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As companies feel the effects of the recession, they need to consider every means to protect their businesses against non-payment by customers. Zoe Williams, Commercial Litigator with Last Cawthra Feather explores a little discussed safety net that companies can use.
A Retention of Title clause (RoT) placed in your contracts may give you the ability to recover goods for which payment has not been received.
Zoe explains “Basically the clause provides that, the seller retains legal title to certain goods until payment is fulfilled; it also can serve to gain precedence over other creditors this is particularly effective as protection for where a customer becomes insolvent.”
But Zoe cautioned “For a RoT clause to be effective it must be properly drafted and incorporated into the contract with the customer, merely including it in your T & C’s can not be relied on.”
Obviously, an equally crucial point is that the goods supplied must be readily identifiable as your company’s in order to be capable of being recovered and sold on.
In summing up Zoe said, “Having the clause in place is an excellent start, but to make a successful smooth recovery under retention of title, please get advice and act quickly as your lawyer can help you pursue a claim against a customer or an insolvency practitioner and/or make an appropriate application to the Court, by way of injunction if necessary”
Last Cawthra Feather LLP (LCF) is a leading and an award winning law firm. The firm has offices throughout Yorkshire. It now has 12 partners and 115 employees. Visit www.lcf.co.uk for more information.
Zoe Williams is a Commercial Litigator based in at LCF’s Leeds Office
