Retention of title

The following Commercial practice note provides comprehensive and up to date legal information covering:

  • Retention of title
  • What is a retention of title (ROT) clause?
  • What does a retention of title clause do?
  • Key elements of retention of title clauses
  • Extended retention of title provisions
  • Identification and combined goods
  • Proceeds of sale
  • All monies clause
  • Practical considerations
  • Buyer’s terms and conditions
  • More...

Retention of title

This Practice Note considers retention of title clauses, also known as reservation of title, ROT or Romalpa clauses. It considers the uses and limitations of retention of title clauses in protecting a creditor-seller from the insolvency of a debtor-buyer. The Practice Note considers the key elements of retention of title clauses, simple retention of title clauses and extended retention of title clauses including ‘all monies’ clauses and ‘proceeds of sale’ clauses. It also considers some practical matters concerning incorporation of retention of title clauses, enforcement and alternate routes of protection open to a seller.

What is a retention of title (ROT) clause?

At its simplest, a retention of title clause is a provision in a contract which allows the seller to retain title to goods which it has delivered to a buyer until the buyer has paid for them in full or, where permitted to do so, sold them on to a third party (Aluminium Industrie Vaassen v Romalpa Aluminium). A retention of title clause is sometimes referred to as a reservation of title clause, ROT clause or Romalpa clause, after the case bearing that name. Its purpose is to protect the unpaid seller against the buyer’s insolvency, giving it priority over other creditors in respect of the goods concerned.

Under the Sale of Goods Act 1979 (SGA 1979), property in specific or ascertained goods

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