What happens when your customer cannot pay for the goods you have delivered, whether due to insolvency or otherwise?

You may be able to recover those goods if you have a clause in your contract with the customer, whereby your reserve title to the goods until the customer has paid for them.

There are four basic types of reservation of title provision:

• Simple - you keep title until you are paid for the goods
• All Monies - you keep title until you are paid for all goods you have supplied to the customer
• Manufactured - you look to keep title until payment, even if the goods have undergone a manufacturing process to the customer
• Proceeds - you look to keep title until payment in the sale proceeds where the customer has sold the goods

Simple and All Monies provisions are the easiest to establish, but in all cases it is essential that you can show that the provision was incorporated into your contract with customer.  You also need to be able to identify the goods, normally by serial number or marking.  It is easier if you are the only supplier of those particular goods to the customer.

You will also need to give credit for any part payment.  Unless the payment is specific to a particular order, or the terms of the contract dictate otherwise, payments are normally allocated to the oldest outstanding invoices.

Even if you have already commenced legal proceedings against the customer for the invoice value of the goods and perhaps got judgement against them, you can still look to recover the goods, unless the contract provides otherwise.  If the goods are sold by any insolvency practitioner acting for the customer whilst your claim for their return is pending, you may be able to recover their value.

To claim the goods you need to:

• Identify the goods
• Show that the contract reserves title in those goods to you
• Establish the debt
• Get confirmation that the goods will be retained in a specific, separate area and that you will be granted inspection facilities.

We can help by giving specific advice on these matters and where appropriate, acting on your behalf to recover the goods.  Where legal proceedings are not necessary, we can charge on a contingent basis, whereby you only pay if we recover, the charge being a percentage of the invoice value of the goods.  If legal proceedings are necessary and we believe you have a good claim, we can charge in the basis of a conditional fee arrangement, linked to success.

When in doubt please contact, Nicholas Carr