Isher Fashions UK ("Isher") supplied Jet Star Retail Limited ("Jet Star") with goods. The contract for the supply of the goods contained retention of title provisions, but it was agreed between the parties that the contract implicitly gave Jet Star the right to deal with the goods despite Isher's claim to retention of title. The contract also gave Isher a right, by notice, to prevent Jet Star from selling or parting with possession of any goods supplied if Jet Star became the subject of formal insolvency proceedings.

It wasn't so long ago that retention of title (RoT) clauses took somewhat of a backseat. Afterall, deciding who owned what on a construction site given the number of parties involved in any one project was not an easy task. However, given current market conditions and the increase of buyer insolvency, many suppliers are turning their attention back to the clause in an attempt to claw back their goods.

In these uncertain economic times, sellers often find themselves concerned about receiving payment for goods sold. More and more businesses are suffering cash flow problems often as a result of their own customers becoming insolvent. Demanding payment up front is simply not a commercial reality for most businesses. Businesses can find themselves living in fear of one of their larger purchasers reneging on payment due to a lack of cash flow or insolvency. The knock-on effects of such an occurrence may be devastating to the seller.

In the current recession landlords are among the fi rst to lose out when a company goes into insolvency, be it a pre-pack sale or a conventional administration process. It is important, therefore, for landlords to know what rights they retain when confronted with the administration of their tenant in order to ensure the full rent is paid - if they are still entitled to it - or, at the very least, to increase their bargaining position. In this article, we look at the circumstances where an administrator is obliged to pay the landlord’s rent in full.

In John David Hedger (the Liquidator of Pro4Sport Ltd) v David Adams [2015], the Liquidator of Pro4Sport Ltd (Pro4Sport) made an application to the Court under section 212 of the Insolvency Act 1986. The claim arose out of one transaction which took place shortly before the liquidation of Pro4Sport on 20 July 2012. On 25 June 2012 Mr Adams, on behalf of Pro4Sport, transferred all, or practically all, of the assets of Pro4Sport to an associated company, Pro4Sport.co.uk Ltd (Pro4Sport.co.uk) for a deferred consideration of £47,000 plus VAT.

In the recent case Blue Monkey Gaming v Hudson & Others the High Court held that the responsibility of identifying and proving title to goods under retention of title clause falls solely on the seller, not the administrators dealing with an insolvency.

Background

The English Court of Appeal decision in Caterpillar v John Holt & Company, and its analysis of “retention of title” and “no set-off” clauses, will be of interest to commodity traders, compliance officers and legal counsel in industries dealing with energy and natural resources internationally.

Who to pay when the bunker supplier becomes insolvent

1. Introduction

This post addresses the question of how retention of title (“ROT”) provisions are effectively agreed to as part of the contractual relationship between a supplier and its German customer under German law.

The English Court of Appeal decision in Caterpillar v John Holt & Company, and its analysis of “retention of title” and “no set-off” clauses, will be of interest to commodity traders, compliance officers and legal counsel in industries dealing with energy and natural resources internationally.