Check a buyer before you ship
Before extending credit or delivering goods, check whether the company is financially stable enough to pay.
What is retention of title?
Retention of title (ROT) is a legal clause in a contract of sale where ownership of goods stays with the seller until full payment is received. You deliver the goods, but you do not transfer ownership until the buyer pays. If the buyer becomes insolvent before settling the invoice, you have a legal right to reclaim those goods.
The legal foundation is the landmark case Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976], which confirmed that sellers can separate possession from ownership. This is why ROT clauses are often called "Romalpa clauses" in UK commercial law.
For suppliers in construction, manufacturing, wholesale, and distribution, ROT is one of the few protections available when a buyer fails. But it only works if the clause is properly drafted, the goods are identifiable, and you act quickly.
Types of retention of title clauses
Simple ROT (strongest). Title to the specific goods delivered is retained until those goods are paid for. This is the most enforceable form. The goods must remain identifiable and in the buyer's possession.
All-monies ROT. Title to all goods you have supplied is retained until every outstanding debt owed by the buyer is paid. Broader coverage, but courts sometimes treat this as an unregistered charge, making it harder to enforce.
Proceeds clause. If the buyer resells your goods, you claim the sale proceeds rather than the goods themselves. Courts have largely resisted these clauses, treating them as equitable charges that require registration under the Companies Act 2006.
Does retention of title actually work in practice?
The hard truth: ROT is powerful on paper but difficult to enforce in many real-world insolvency situations. Administrators often resist ROT claims, and the burden of proof falls on you.
- Simple ROT on identifiable goods is the strongest position. If your goods are still on the buyer's premises, clearly yours, and have not been altered, you have the best chance of recovering them.
- Goods that have been mixed or incorporated into other products lose their identity. A steel supplier whose steel has been welded into a structure cannot reclaim it.
- Goods that have been resold are gone. Proceeds clauses are rarely upheld as they create what the courts treat as an equitable charge.
- All-monies clauses face scrutiny. Administrators argue they create a floating charge requiring registration, which most suppliers never complete.
The practical reality: simple ROT on identifiable, unmixed goods works. Everything else is legally uncertain and frequently challenged.
How to enforce retention of title in insolvency
- Identify your goods. Serial numbers, batch codes, delivery notes, and photographs. You need to prove which goods on the premises are yours.
- Notify the administrator immediately. Write to them the moment you learn of the insolvency, citing your ROT clause and listing the goods you are claiming.
- Provide your contract and evidence. Send copies of your terms and conditions (showing the ROT clause), purchase orders, delivery notes, and unpaid invoices.
- Exercise your right to collect. Request access to the premises to identify and remove your goods. The administrator should allow this if your claim is valid.
- Document everything. Photograph goods on site, note their condition, and keep a paper trail of all communications with the administrator.
Why retention of title is not enough on its own
ROT protects you after things go wrong. It is a last resort, not a strategy. Consider the reality: by the time you are trying to reclaim goods from an insolvent buyer, you have already lost time, money, and goodwill. The administrator may dispute your claim. Your goods may have been mixed, used, or resold. The process takes months.
Prevention is better. If you had checked the company's financial health before delivering goods on credit, you would have seen the warning signs. Late filings, CCJs, director history of failed companies, deteriorating payment patterns. A credit check costs a fraction of what a disputed ROT claim costs in legal fees and lost stock.
The strongest position is both: a well-drafted ROT clause as your safety net, combined with rigorous credit checking to avoid needing it in the first place.
When retention of title is tested
Building materials on site
A building materials supplier delivered £40,000 of stock to a construction firm. The firm entered administration with pallets of unused materials still on site. Simple ROT applied, the goods were identifiable, and the supplier recovered them. But timing was critical.
Food wholesaler, goods mixed and resold
A food wholesaler supplied perishable stock to a restaurant group. By the time insolvency hit, the goods had been consumed, mixed into dishes, or sold to customers. ROT was unenforceable. The supplier recovered nothing. A credit check would have flagged the risk months earlier.
Machinery with serial numbers
A machinery supplier retained title over CNC equipment with unique serial numbers. When the buyer entered administration, the machines were clearly identifiable and had not been altered. The supplier exercised ROT and collected the equipment within two weeks.
Textiles incorporated into finished goods
A textile manufacturer supplied fabrics to a clothing brand. The fabrics were cut, sewn, and incorporated into finished garments. The original goods no longer existed in identifiable form. The administrator rejected the ROT claim. Prevention would have been the only protection.
ROT protects you after. A credit check protects you before.
A Quick Check costs £29. It shows you financial stability, director track record, and 72 machine learning risk signals drawn from 12 live data sources, before you ship a single item on credit.
ROT is your legal safety net when all else fails. But it does not work on mixed goods, resold stock, or incorporated materials. The only reliable protection is knowing who you are trading with before you extend credit.
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