Retention of Title and creditor claims

A Retention of Title Clause (often referred to as a Romalpa Clause) is contained in a contract between a buyer and seller that provides that legal title to the goods does not pass to the buyer until the seller has been paid. Various requirements must be satisfied in order for a Retention of Title claim to be valid and enforceable.

Retention of Title claims become particularly relevant in insolvency situations, as often the insolvent company will not have paid for all the goods that have been supplied.  It is quite common for disputes to arise as to the validity of the Retention of Title claims.

The requirements for a valid Retention of Title Clause are:

  • The Retention of Title Clause must be an effective “simple” or “all monies” clause
  • The Retention of Title Clause must have been incorporated into the contract between the parties
  • The goods must be capable of identification. The level of identification required depends on whether the Retention of Title clause is a “simple” clause or an “all monies” clause.

In the event of a buyer’s insolvency, the seller will want to rely upon the Retention of Title Clause and be able to collect the goods supplied. In addition to the above, a seller should ensure that a right is reserved to enter onto the buyer’s premises to recover the goods

The key with Retention of Title claims is to act quickly when looking to enforce them, i.e. before the goods are sold on by the buyer.

Our team can assist both in drafting Retention of Title clauses and advising on the process to get the maximum protection from the wording of the Retention of Title clause as well as its operation and incorporation. We can also advise on any dispute that arises when trying to enforce a Retention of Title clause.

If you would like to speak to one of our specialist Restructuring, Turnaround & Insolvency solicitors, please contact us on 01733 888888.