Simple Retention of Title Clause

This Simple Retention of Title Clause, also known as a Reservation of Title clause, allows for a supplier of goods to transfer possession of goods which have not yet been paid for, for example goods supplied on credit, whilst ensuring that he retains legal and beneficial title in the goods until the buyer pays for them. 

Whilst such a clause should not be used as a replacement for a credit checking system, it will provide an added layer of protection for the supplier in the event that the buyer fails to pay and is in danger of becoming bankrupt or insolvent.

This template allows the seller to enter the buyer’s premises for the purposes of inspecting or removing goods in which legal title has not yet passed (i.e. for which payment has not been made), and places an obligation on the buyer to ensure that the goods which are the subject of the clause are kept separately and are clearly identified as the goods of the seller.

Whilst the seller will benefit from the retention of legal title in the goods, the buyer will still bear the risk in the goods and will be obliged to insure them against damage or loss.

This Simple Retention of Title Clause is not suitable for situations where the buyer is likely to either sell the goods on or use them in a manufacturing process. For these situations the more complex clauses allowing for the recovery of the proceeds of sale and/or acquisition of title of resulting goods should be used.

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