1. What rules, if any, govern retention of title (RT) in your country? In the absence of rules, what are the principal mechanisms, if any, on which RT is based in your country?

The RT is governed by the Sale of Goods Act 1957 (SOGA) which sets the default rules applicable to the terms and conditions for contracts for the sale and purchase of goods.

  1. Please describe the characteristics and scope of your country’s RT rules

Generally, parties are free to expressly agree in their contract when title to the goods is to pass from the seller to the buyer. For example if the parties agree that title will only pass after payment is received by the seller, the court will enforce that provision of the contract. In default of express terms to the contrary, Sections 18-24 of SOGA provide for when title is to pass in respect of various situations.

  1. If RT is not regulated in your country, are there similar or commercially equivalent forms of security preserving seller’s rights to the goods?

The RT is regulated under the SOGA 1957.

  1. What is the relation of RT and passage of risk in your system? How may a seller protect its interest after the passage of risk?

Parties are free to expressly agree in their contract when risk of the goods is to pass from the seller to the buyer. In default of agreed express terms, under Section 26 of SOGA risk will pass to the buyer when title passes to the buyer.

  1. What are formal requirements, if any, including timing, to perfect the seller’s right?

There are no formal requirements as such for the seller to effect in order to enjoy the RT rights stated above.

6. Effectiveness

  1. Does sale to a third-party break RT? What if goods have been transformed or sold?

Section 27 of SOGA provides that if title has been retained, the sale to the third party will not be effective to pass title.
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If yes, is there a possibility to transform the RT in case of a sale to a third party?

Not applicable.

  1. Enforcement of RT if delinquent buyer is not insolvent — What is the judicial procedure and what is its likely timeline?

The required judicial procedure in this case is to seek a court order requiring the goods to be delivered to the title holder by the person in possession of the goods.

  1. What happens in case of conflict between RT and a buyer’s creditors’ rights, including carrier’s liens?

Generally speaking, the rights of the title holder should prevail.

  1. Bankruptcy — interaction of RT (which is not contract law) and bankruptcy law

Where the goods are either still with the buyer or have already been sold by the buyer, the rights of the title holder under RT should prevail but if a court order has approved the sale to a third party, the RT title holder’s rights may be prejudiced.

7. Model clause(s) — Drafting tips

NOTE: The following language is based on contractual provisions commonly seen in this country, but readers should always consult legal counsel before including an RT clause in a contract.