Q&As

There is a retention of title clause incorporated into a contract between a buyer and seller for the supply of goods. The buyer is now in liquidation. The buyer was previously making payment by installments and these part payments comprise approximately 50 per cent of the total sum due under the contract. If the liquidator returns the goods to the seller, does the seller need to refund the sum of the part payments to the buyer? Is the buyer entitled to reimbursement of the sums paid and, if so, what is the process?

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Last updated on 16/09/2021

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • There is a retention of title clause incorporated into a contract between a buyer and seller for the supply of goods. The buyer is now in liquidation. The buyer was previously making payment by installments and these part payments comprise approximately 50 per cent of the total sum due under the contract. If the liquidator returns the goods to the seller, does the seller need to refund the sum of the part payments to the buyer? Is the buyer entitled to reimbursement of the sums paid and, if so, what is the process?

There is a retention of title clause incorporated into a contract between a buyer and seller for the supply of goods. The buyer is now in liquidation. The buyer was previously making payment by installments and these part payments comprise approximately 50 per cent of the total sum due under the contract. If the liquidator returns the goods to the seller, does the seller need to refund the sum of the part payments to the buyer? Is the buyer entitled to reimbursement of the sums paid and, if so, what is the process?

A retention of title (ROT) 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 (see Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd). 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. ROT clauses can be simple where the seller retains title to the goods until the buyer pays the price of the goods, or

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Key definition:
Retention definition
What does Retention mean?

Retention is a percentage of the sums payable by way of interim payment deducted by the employer and held until completion. Half of the retention is released on practical completion, the other half on the expiry of the defects liability period or issuance of a certificate of making good defects.

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