Are you confident that you will be able to retake possession
of your goods if a customer has a liquidator, receiver or
administrator appointed to it?
A retention of title provision seeks to prevent title to your
goods passing to your customer until the customer has paid for the
goods in full.
Effective retention of title arrangements are extremely
important in the current economic climate. It can mean the
difference between you being able to repossess your goods if a
customer fails without paying your accounts in full and getting in
the queue with other unsecured creditors.
Many businesses have a retention of title term in their trading
terms and conditions. However such terms are either not effective
at all or are not 'all monies' clauses and, consequently,
difficult to enforce effectively.
Unless your retention of title provision is an 'all
monies' clause, you will not be able to repossess your goods
unless you are able to identify specific goods supplied under the
unpaid invoice. Without, for example, a serial number on the
invoice, this will be extremely difficult and in most cases is
impossible. It will not be sufficient for example, to show that the
goods were supplied by you and nobody else.
Likewise, without the protection of an 'all monies'
clause, if you supply the same 'type of goods' on an
ongoing basis to a customer, without serial numbers or some similar
identifier (this is not always practical or possible) so as to
match the unpaid invoices to the unsold goods you have supplied,
you will not be able to get your goods back.
Under an 'all monies' retention of title
provision, identification of particular goods to a particular
unpaid invoice is not necessary. All that you need to show
is that the customer owes you money on an unpaid account; any
We frequently see businesses being unable to recover their goods
because of an inadequate retention of title arrangement. In some
cases, we have seen many thousands of dollars of unpaid goods not
able to be recovered when a customer fails, because they did not
make an 'all monies' retention of title clause.
The cost of reviewing, and if necessary, amending such terms is
small compared to the exposure you may have to your biggest
customer at the moment.
If you are an accountant or other financial advisor, you should
as part of any review of your clients' business ensure that
they are protected with an 'all monies' retention of title
Angelo has broad skills in the financial services sector
including specific expertise in banking, finance, insolvency and
reconstruction, and commercial litigation. Angelo's practice
includes advising on and the preparation of a variety of facility
and finance documentation and transactions, including secured,
unsecured, structured and project finance. Angelo has extensive
industry experience and his clients include public and private
companies, directors, shareholders and trustees. Angelo has acted
in some of Victoria's largest dispute resolution
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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