Retention-of-title clause prevents seller suing for the price of goods

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A recent Court of Appeal case explains the dangers of sellers relying upon valid retention-of-title (ROT) provisions where they want the price, not the goods, back.

In order to maintain an action for the price of goods sold, a seller must fall within the criteria set out in section 49 of the Sale of Goods Act 1979, which is mandatory, not permissive, in nature; and a valid ROT provision that prevents title passing to a buyer means a seller’s terms and conditions must specify a date certain irrespective of delivery if he is to be able to maintain an action for the price of the goods.

In the case, C sold goods to JH on ROT terms. It was held that title to the goods had been validly reserved by C. When C sued JH for the price, JH argued that C could not bring itself within either s49(1) or s49(2) of the Sale of Goods Act 1979 and so could not sue for the price as one or other of those criteria were mandatory before an action for the price could be maintained. C could not meet the criteria in 49(1) because title had not passed to JH. It could not bring itself within 49(2) because the goods had been delivered and there was no date certain on which the invoices outstanding could be said to be due because of a series of rescheduling agreements…

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