The extensive retention of title: a valuable clause in bad times

Retention of title

The retention of title can no longer be ignored in the general terms and conditions of sale and delivery of a supplier. The retention of title is a delivery condition that stipulates that the goods and/or items delivered by a supplier to a customer remain its property until the customer has paid the supplier for these goods and/or items. For whatever reason, the buyer fails to pay for the delivered goods and/or items, then the supplier can retrieve them from the buyer. Without the need for a procedure or court ruling. Due to the damage-limiting results that are achieved with the retention of title both inside and outside a bankruptcy situation, this form of security has a very important place in trade.

In many cases, however, the retention of title alone is not sufficient and you, as a supplier, want the retention of title to also extend to all other claims you have against your customer. In that case it is possible that you extend or extend the retention of title. This is then called the extended or extended retention of title. A condition for this extended or extended retention of title is that the other claims that you as a supplier have against your customer are related to or arise from earlier or later deliveries.

The retention of title is an increasingly common clause. If the customer accepts this delivery condition, you as a supplier have more certainty that you can retrieve a large part of your delivered goods and/or items in the event of payment problems by the customer.

In the event of bankruptcy, an extensive retention of title can be valuable. If the extended retention of title has been agreed before the conclusion of the sales agreement, in the event of bankruptcy of the buyer, all goods delivered and to be delivered by the supplier will remain the property of the supplier until all claims that the supplier has against the buyer have been settled. In this way, the supplier avoids the problem of proof of whether or not the goods delivered have been paid for. All demonstrably delivered goods can be retrieved if there is still a claim against the customer. It does not matter whether the relevant invoice of the retrieved goods has been paid or not.

The extended retention of title only provides you as a supplier with the security referred to if you have properly agreed it, i.e. in writing before or at the conclusion of the agreement, by inclusion in the offer, the (franchise) contract or the general terms and conditions of sale and delivery. If the extended retention of title is not expressly included in the (franchise) contract, and is only stated in the general terms and conditions of sale and delivery, it is very important that your customer (franchisee) takes note of your terms and conditions of sale and delivery in good time and, if possible, also agree to this in writing. Timely can in any case be understood to mean before the (franchise) contract is signed.

It is therefore worth checking your general terms and conditions of sale and delivery, but also your franchise contract and, if necessary, supplementing it with the valuable clause “the extended retention of title”.  

Ludwig & Van Dam franchise attorneys, franchise legal advice