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Retention Of Title Notes

LPC Law Notes > International Commercial Law Notes

This is an extract of our Retention Of Title document, which we sell as part of our International Commercial Law Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.

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Retention of Title (ROT) SALE WHEN IS ROT IMPORTANT???DEFINE: LIEN?

TRANSFER OF OWNERSHIPROT GENERAL

CREATION OF CHARGES PROCEEDS SALE

OF

SEPARATION OF PROCEEDS???????
MIXED,MANUFACTURED OR ALTERED GOODS

DETACHABLE GOODS?OF

GOODS: OWNERSHIP & ROT

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) 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 Specific/ascertained goods o Identifiable at time of contract o SGA 17 - passes when parties intend it to pass Unascertained goods o 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: o Rule 1 - unconditional contracts for sale of specific goods in deliverable state; property passes when contract made (e.g. chocolate in a shop) o 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) o Rule 3 - conditional contracts where goods in deliverable state but S must weigh/test/measure to ascertain price; as for Rule 2 o 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 o Rule 5 - unascertained goods: property passes in two circsGoods unconditionally appropriated to contract and the other expressly or impliedly assents;S delivers goods and B expressly or impliedly assents 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 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 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 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 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 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]) 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 accountWHICH ?CANNOT BEIDENTIFIED
? If mixed together with other products of same type + specification, retain title to proportionate share of the bulk BULK
? Distinct from 'mixed goods' above as products have not lost identifiable nature (of same type /
STORAGE grade / quality)
? E.g. oil - owners own in proportion (Glencore [2001])

GOODS

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PLC

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