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Suppliers of goods will probably be aware that it is possible to retain ownership of the goods until they are paid for, provided that the necessary contractual terms are agreed. If a retention of title clause is going to be relied upon, it is essential that it is incorporated into the agreement with the customer at the time the agreement is made. It is far too late to have a retention of title clause merely printed on the invoice. Ideally, suppliers should have their customers sign terms and conditions at the outset which incorporate a retention of title clause, but it is not fatal for the terms not to be signed, as long as they can clearly be shown to have been incorporated into the contract. Beware of printing terms and conditions on the rear of letterheads/ quotations; these days, quotations are often faxed through or scanned and sent by email, with the common error that the back of the letterhead/quotation is not scanned and despatched. If your terms are printed on the back of the letterhead/quotation, it is important to include on the front page that the quotation is subject to terms and conditions which are printed on the reverse. This can be sufficient notice, but it is not as good as ensuring that the customer has the terms and conditions at the same time. It is also possible to incorporate a retention of title clause where a supplier has had a course of dealings with the customer, but again this is nowhere near as good as ensuring that the printed terms are sent with each quotation.
Retention of title clauses are important because Section 25 of the Sale of Goods Act provides that where a person having bought or agreed to buy goods obtains possession of the goods with the consent of the seller (or documents of title to the goods), the delivery by the buyer under any sale to any person receiving the goods in good faith and without notice of any lien or other right of the original seller in respect of the goods will obtain ownership of them.
The same principle does not apply where the contract is for the supply of goods and services - where the person selling the goods is also to install them, for example, as the Sale of Goods Act does not apply to such a transaction.
Problems arise with retention of title clause where goods have been incorporated into a building - such a concrete blocks in a wall - and difficulties can often arise where the seller of the goods has no right to go onto the buyer's property in order to recover the goods. Careful drafting of the retention of title clause, and adapting it for the needs of that particular business is vital.
