This website uses cookies to ensure you get the best experience on our website. Learn more

LPC Law Notes International Commercial Law Notes

Retention Of Title Notes

Updated Retention Of Title Notes

International Commercial Law Notes

International Commercial Law

Approximately 179 pages

A collection of the best notes for new University of Law module 'International Commercial Law' the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short, these are what we believe to be the strongest set of International Commercial Law notes available...

The following is a more accessible 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:

Sale of Goods: Ownership & ROT
When is ROT Important?
  • Insolvency – goods come under control of liquidator, administrator; S unsecured creditor

  • Risk (risk passes with ownership, SGA 20)

  • Seller’s action for price only possible where ownership has passed (SGA 49)

66
Define: Lien
  • A right which entitles a party to hold on to assets in their possession pending payment of debt

  • Can arise in following ways:

  • Equity

  • From operation of law (legal or common law lien)

  • Bargained for, or extended, as matter of contract (contractual lien)

  • Created by statute (statutory lien)

  • Does not confer on lien holder an automatic right to sell assets

PLC
Transfer of Ownership

Specific/ascertained goods

  • Identifiable at time of contract

  • SGA 17 – passes when parties intend it to pass

Unascertained goods

  • SGA 16 – property cannot pass until goods ascertained

Default provisions SGA 18 (apply where parties do not make provision for passing of ownership)

  • Ascertained/specific goods:

    • Rule 1 – unconditional contracts for sale of specific goods in deliverable state; property passes when contract made (e.g. chocolate in a shop)

    • Rule 2 – conditional contract where goods exist but S bound to do something to put goods into deliverable state; property passes when done and notice given to B (e.g. packaging)

    • Rule 3 – conditional contracts where goods in deliverable state but S must weigh/test/measure to ascertain price; as for Rule 2

    • Rule 4 – goods delivered on approval or sale + return; property passes when B approves or retains beyond fixed time (or reasonable time, if not fixed)

  • Unascertained/future goods

    • Rule 5 – unascertained goods: property passes in two circs

      • Goods unconditionally appropriated to contract and the other expressly or impliedly assents;

      • S delivers goods and B expressly or impliedly assents

67

RoT

General

  • S may reserve title to goods until certain conditions fulfilled (sold, used up etc) (SGA 17, 19)

  • S advantage: as a last resort S can recover goods until paid and prevent liquidator/TiB disposing of goods

  • B advantage: B free to sell or deal with goods as they wish until S uses clause

  • Validity upheld where goods remain identifiable

68
Creation of Charges
  • Right granted over asset(s) to secure debt

  • Gives priority over unsecured creditors

  • Must be registered to be enforced against liquidator (CA 859A)

  • ROT clauses do not generally create registrable charges over B’s assets; S would be charging own assets

  • Highly problematic

68
Proceeds of Sale
  • Innocent TP who buys goods will get good title (SGA 25); S not entitled to proceeds (unless B acting as agent)

  • Simple clauses entitling S to claim proceeds almost certain to be construed as charges

69
Separation of Proceeds
  • Where B sells goods on it will pay proceeds into separate bank account which it will hold on trust for S

  • Problem; rarely complied with and of little use in insolvency

69
Mixed, manufactured or altered goods
  • Original goods used in manufacturing and lose identity, e.g. fabric to clothes, animals to meat

  • S has no rights to new products, only to original ones

  • Court decided that these clauses can only ever create a charge; unhelpful as must be regd if to be of use

  • Problematic and generally unsuccessful

70
Detachable Goods
  • Goods attached to other goods;

  • If readily detachable it is appropriate to have a clause reserving the right of S to detach and remove

  • E.g. diesel engines bolted to generators (Hendy Lennox [1984])

70
Goods which cannot be Identified
  • Where goods mixed with other goods, will belong to B

  • If no ‘all moneys’ clause, rights only attach to specific consignments for which B pays

  • S cannot trace proceeds of sale through B’s bank account

70
Bulk Storage
  • If mixed together with other products of same type + specification, retain title to proportionate share of the bulk

  • Distinct from ‘mixed goods’ above as products have not lost identifiable nature (of same type / grade / quality)

  • E.g. oil – owners own in proportion (Glencore [2001])

71
Drafting an ROT Clause
Checklist
  • Essential clauses: required to ensure clause is legally effective

  • Desirable clauses: provisions which are not essential but make clause work practically for S

  • Bluff clauses: may not be legally effective but included for ‘bluff’ value

71
Essential Clauses
  • Reserving title – simple retention

    • S remains owner and legal ownership does not pass until full payment received

    • If S recovers and resells goods, must reimburse B for advance / part payment

  • Right of entry, seizure & sale

    • Must specifically provide for right to enter premises to recover and re-sell goods (otherwise trespassing)

    • Must also contain trigger events enabling S to exercise these rights

71
Desirable Clauses
  • All moneys clause

    • Ownership does not pass until B pays all amounts owing to S in respect of all goods /debts

    • All outstanding debts must be paid; avoids S having to identify particular goods from particular consignments

  • Sales to sub-Bs

    • Title will pass when B sells goods on – acknowledges SGA 25 (innocent TP gets good title)

  • Separate storage

    • ROT only effective if S can identify goods on collection

    • Can S maximise chances of recoverability, e.g. by separate storage, marking?

    • Clause to allow inspection to check compliance

  • Passing of risk

    • Provide for passing of risk/accidental loss/damage

    • SGA 20 – remain at S’s risk until property passes, unless parties agree otherwise

    • Replace with clause passing risk on delivery and requiring B to insure + hold proceeds of policy on trust for S

  • Insurance

    • If goods destroyed before they can be reclaimed S will want compensation

    • Include clause requiring B to insure goods and hold proceeds of sale on trust for S

  • Detachable goods

    • Where goods are attached to other goods ownership shall not pass to B by virtue of attachment if goods remain identifiable and can be readily detached / removed

72
Bluff Value Clauses
  • Void against liquidators/administrators/TPs if not...

Buy the full version of these notes or essay plans and more in our International Commercial Law Notes.