Exam (elaborations)
First Class Commercial Law Essay
- Course
- Institution
First Class Commercial Law Essay on the effectiveness of retention of title clauses.
[Show more]
1 review
By: siyabimal123 • 5 months ago
Seller
Follow
legalwarrior1
Reviews received
Content preview
QUESTION:‘The protection provided by retention of title clauses to the unpaid seller of goods is more
effective than generally understood.’
Discuss.
ANSWER
Retention of title clauses (hereinafter ROT clauses) have great potential to provide unpaid sellers
with effective protection against a buyer’s insolvency or default.1 However, this potential has been
fettered by English law, with a “judicial disfavour” 2 causing a proliferation of uncertainty,
unpredictability, and inconsistency, rendering the clauses ineffective as means of protection unless
the current position is reformed.
This essay will first provide an overview of ROT clauses before examining their effectiveness
regarding admixture, claiming proceeds of sale and third parties, in light of New Zealand
comparators. Unintended consequences will then be examined, before exploring the issues of
incorporation and whether reform is needed. Finally, this essay will conclude the protection afforded
by ROT clauses to unpaid sellers is less effective than generally understood.
Overview
ROT clauses find their legal basis in sections 17 and 19 of the Sale of Goods Act 1979 (hereinafter
SGA), and can be defined as a “contractual agreement [where] the seller retains title to the goods in
1
Alumininium Industrie Vaassen v Romalpa Aluminium [1976] 2 All ER 552.
2
Angharad Ffion James, ‘An Exploration of the Legal Minefield of Retention of Title Clauses’ [2021] Prifysgol
Aberystwyth University
<https://pure.aber.ac.uk/portal/files/47295936/Final_Version_Angharad_F_James.pdf>.
Page 1 of 9
, question until the price has been paid in full,” 3 even once in the buyer’s possession.4 Generally, they
are used when buyers need to utilise goods to generate a profit to pay the purchase price, whilst
hypothetically securing the seller’s claims to not only the goods, but also cash proceeds, resulting
products, and claims against sub-buyers in cases of resell. 5 Combined with the equitable right to
trace, they have proven to be an “economic lifeline”6 during financial crises like the current recession
as they enable goods to “escape the hands of the liquidator”.7
Simple ROT clauses function effectively and have been consistently upheld since McEntire v.
Crossley.8 However, they have limited commercial utility which is why the recognition of extended
ROT clauses in Romalpa,9 giving sellers rights to proceeds of sale, saw clauses spread “like a dreadful
weed”.10 Whilst this expansion of ROT clauses had great potential, it has failed to be adequately
realised decades later due to a judicial retreat since, with courts eager to decide sellers’ claims to be
void as an unregistered charge, with Phillips J even suggesting Romalpa was wrongly decided.11 It will
be demonstrated that this leaves sellers in a vulnerable, unsecure position.
Mixed goods
3
Directive on Combating Late Payment in Commercial Transactions Art.2.(3).
4
S2(3).and.19(3).SGA.
5
L.S.Sealey and R.J.A.Hooley., Commercial Law: Text, Cases and Materials, (4th edn OUP Oxford, 2008),.468.
6
James (n 2).
7
ibid.
8
[1895] A.C..457.
9
Romalpa (n 1).
10
Iwan.Davies, Effective Retention of Title (1991).10.
11
Tatung (UK) Ltd. V Galex Telesure Ltd [1989].
Page 2 of 9
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller legalwarrior1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73314 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now