Retention of Title
The Personal Property Securities Act 2009
Has now commenced and essentially re-formulates the law relating to security over goods. A new Register has been created and all interests in goods must be registered.
When goods are supplied to a customer before a supplier has received payment the supplier usually confirms in its trading terms that it retains title to those goods until payment has been made. This is in line with usual commercial practice and is called a “retention of title” or “Romalpa” clause. The main purpose of the clause is to show continued ownership of those unpaid goods in the event that the customer becomes bankrupt or has a liquidator appointed. The new legislation now covers the way this procedure works and an interest must be registered to enable priority to be claimed against other creditors, a liquidator or trustee in bankruptcy.
There is a transitional period under which retention of title arrangements which are unregistered continue to be effective notwithstanding registration, however, that period expires in January 2014.
It is vital that all sale documents and procedures in relation to the sale and distribution of goods comply with the processes set out under the new Act to ensure the creation of proper security interests and proper enforcement procedures.
Please contact Lewis Webb if you have any questions in relation to these matters generally.
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