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Retention Of Title Rot Clause Notes

LPC Law Notes > International Commercial Law Notes

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A more recent version of these Retention Of Title Rot Clause notes – written by Cambridge And Oxilp And College Of Law students – is available here.

The following is a more accessble plain text extract of the PDF sample above, taken from our International Commercial Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

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1 ROT Retention of Title: International Considerations Overvie wNo harmonising international code; determined by local legislation; Closest we get is EU directive on Combating Late Payment in Commercial Transactions; Generally vague; freedom for states as to how they deal with them; Remember Practicalities; o Value of goods - distance - perishable (may be unusable when recovered) - made to specification. All Monies Clauses; o Enforceable in most jurisdictions; o Qualifications;Main Variatio ns in Jurisdic tionsGermany: restrictions in standard form contracts - cannot secure > 120% of the debt Mixed Goods Clauses; o Do not work in some jurisdictions; o Some proportionate; e.g. Germany, Spain, Italy, Holland, France.Processed Goods o UK & France - cannot claim ownership of goods subject to manufacturing process and therefore identity lost. o Germany - seller can become co-owner of end product. o Spain - seller can become sole owner if bad faith involved.Proceeds of Sale o UK: fails. o Germany: possible but not if sub-buyer acts in ignorance of the arrangement.Universal Commercial Code; o Enacted by 50 US states; o Uses the term 'security interests'; o S.2-401; any retention is... limited in effect to a reservation of a security interest'.Enforceability o Enforceable against buyer; seller has a preferential right to the goods compared to buyer. o To be enforceable against third parites (e.g. liquidators) it must be perfected;USAJapan


German y

Notifying third parties - file financial statement at various local & state recording offices.

Mixed Goods o The rights attached to security interest can remain in place; o If competing suppliers claim interest they are entitled to the proportion of the goods relating to the value of the material that they supplied. Separate Contract o Standard procedure for these clauses to be contained in a separate contract called a Security Agreement. Decided by contracting parties; In absence of ROT clause title passes; o Ascertain Goods: when contract formed o Unascertained Goods: when goods become ascertained.Hire Purchase Legislation; o Title remains with seller until purchase price remained in full; o Does not apply to straigthtforward sale of goods.Chapter III, Section IV, Code of Commercial Law o Clauses must be in writing but need not be signed -may be included in T&Cs; o Clause must be clear and written in larger text than the rest of the contract.Enforceability o Only enforceable if goods still identifiable; o If manufactured - may well be lost.Limitation o Must claim goods within 3 months otherwise rights lost; o This cannot be extended.Section 449 German Civil Code; o 'If seller of moveable property has retained title until payment... it is to be presumed that transfer of title takes place subject to condition precedent of payment in full.' o Three main types of ROT Clause;Simple Clause:?Property does not pass until payment received in full.

Prolonged/Continued Clause;?Advance assignment of rights clause (provision for re-sale of rights by buyer )Title does not pass to buyer until purchase price paid and buyer has met all other

Processing Clause (Seller may extend right to process)

Transmitted ROT (buyer agrees to pass on ROT by retaining original seller's title against sub-buyer. Extended Clause;

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