Q&As

When might it be necessary to register a retention of title clause at Companies House?

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Published on LexisPSL on 31/05/2016

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • When might it be necessary to register a retention of title clause at Companies House?
  • What is a retention of title clause?
  • What is the effect of a retention of title clause?
  • Does a retention of title clause constitute a charge?
  • Consequences of failing to register a charge

When might it be necessary to register a retention of title clause at Companies House?

What is a retention of title clause?

At its simplest, a retention of title clause 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.

Under the Sale of Goods Act 1979 (SGA 1979), property in specific or ascertained goods passes to the buyer when the contracting parties intend it to pass (SGA 1979, s 17). A retention of title clause in the contract is evidence that the parties did not intend property in the goods to pass to the buyer prior to full payment, even though the goods have been delivered to the buyer or to a carrier or custodian for the buyer.

For detailed information on retention of title clauses, see Practice Note: Retention of title.

What is the effect of a retention of title clause?

A valid retention of title clause gives a seller priority over secured and unsecured creditors of the buyer if the buyer fails to pay for the goods where it is insolvent or for other reasons specified in the clause. The clause should give the seller the right to recover the goods from the buyer. As title will not have passed, the seller, once it has regained possession, will have the right to sell the goods to

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