Retention of Title Clause

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It is normal in commercial practice for goods to be supplied on credit – a manufacturer may need to sell the goods they have produced before being able to pay a supplier of the raw materials. This can create problems for the supplier because if the buyer becomes insolvent before payment and after property in the raw material has passed, they become part of the buyer's general assets and the seller will simply rank alongside other unsecured creditors, which will involve expense in lodging proof of a claim and may yield little or no benefit. As such, to some extent, the seller can guard against this possibility by not passing the property in goods to the buyer. S.17(1) SGA 1979 states that where there is a contract for the sale of specific goods, the property in them is transferred to the buyer when both the parties to the contract intend it to be transferred. If the parties do not intend the property to pass, it will not do so, even if the buyer obtains possession (Tank and Vessels Industries v Devon Cider). S.19(1) SGA 1979 goes even further than this and provides that where there is a contract for the sale of specific goods, the seller may, by terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. Property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. The combination of s.17(1) and s.19(1) therefore opens the doors to sellers to inster into the contracts retention of title clauses. In the simplest of cases, provided the retention of title clause has been properly incorporated into the sale contract, an unpaid seller will be able to recover the goods sold. (Mc Entire v Crossley) Difficulties arises when the seller attempts to secure more extensive remedies against the buyer, especially where these greater remedies create a charge. This more
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