Retention of title is a contract clause under which ownership of goods remains with the seller until the buyer has made full payment, protecting the seller against buyer insolvency even after physical delivery has occurred.
In trade practice
Sellers insert a retention of title clause into their standard terms and ensure it is expressly accepted by the buyer in writing. The clause becomes difficult to enforce once frozen goods are commingled with other stock in a shared cold store, because individual lots can no longer be identified. Buyers’ insolvency practitioners in many EU member states require the goods to be separately identifiable and traceable to the original consignment. Suppliers should therefore ensure pallet labels, lot numbers and warehouse records link each consignment to the relevant invoice.
In a specification
A specification or contract should state the precise payment milestone at which title passes and cross-reference the lot identification requirements that allow the clause to be enforced.