Seller beware!

There is no inconsistency between a simple retention of title clause and an implied, or even express, right of a buyer to sell on the goods before paying the seller. So held the Court of Appeal in giving judgement in Fairfax Gerrard Holdings Ltd and others v Capital Bank Plc (now Bank of Scotland Plc by substitution) on 27 November 2007.

Read our analysis to find out more about the judgment.

Sellers, supplier and trade financiers

Review the appropriateness of the use of retention of title clauses as a means of taking security for your business. Make sure you consider the use of other secured financial instruments.

Finance and leasing companies

Be aware that, where title to an asset is challenged on the basis of the use of a retention of title clause, it is by no means certain that title has not passed to you.

Wragge & Co LLP acted for Capital Bank in this case.

These action points have been written by Greg Standing, director in Wragge & Co's Recoveries and Finance team.