Retention of Title Clauses in UK Supplier Contracts

What retention of title achieves

Under English law, ownership of goods normally passes at the time of delivery unless the contract states otherwise. A retention of title (RoT) clause defers the transfer of ownership to the buyer until payment is made in full. If the buyer goes into administration or liquidation before paying, you — as the supplier — can assert ownership of identifiable goods still held by the buyer, rather than joining the queue of unsecured creditors.

This matters because unsecured creditors in an insolvency typically recover a small fraction of what they are owed. A valid RoT clause can convert your unsecured claim into a proprietary right to recover the physical goods.

Simple and all-sums clauses

A simple RoT clause retains title to specific goods until the invoice for those goods is paid. This is the easiest to draft and enforce, but it covers only the specific unpaid delivery — not any other outstanding balance.

An all-sums clause (or 'current account' clause) retains title to any goods on the buyer's premises until all amounts owed to you — across all invoices — are paid. This gives broader protection but is more complex: courts scrutinise these clauses carefully, and if they are construed as creating a registrable charge over the buyer's assets, they must be registered at Companies House within 21 days or they are void against an insolvency practitioner. Seek legal advice on drafting all-sums clauses.

What RoT clauses cannot protect against

RoT clauses face several practical limitations:

• Goods that have been resold — once goods pass to a bona fide purchaser for value, you cannot recover them
• Goods that have been mixed or incorporated — raw materials used in manufacturing become part of the finished product; ownership of the finished product lies with the buyer
• Goods that cannot be identified — fungible goods (e.g. bulk grain) mixed with other stock are difficult to trace
• Goods without the clause in place at delivery — a clause introduced later, or not properly incorporated into the contract, has no effect

Practical steps to make RoT effective

To maximise the chance of enforcing a RoT clause: include it in your standard terms and conditions and ensure the customer acknowledges those terms in writing before first delivery. Mark your goods with your company name or a unique identifier where practical. Maintain accurate records linking each delivery to specific goods, so you can demonstrate which goods belong to which invoice in an insolvency.

When you learn that a customer may be entering insolvency, act immediately. Contact the administrator or insolvency practitioner in writing, assert your RoT claim, and arrange access to inspect and recover goods. Delays allow goods to be sold or used, extinguishing your claim. Confirm the precise steps and wording with your solicitor before acting.