Credit & Security – Revision Notes:

 In essence, lenders seek two things: to be repaid on time and to know that their debt is secure.

 Ideally, from a seller’s perspective, the best position to be in is to be paid before possession of
and the property in the goods passes to the buyer.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 327.
 In modern commercial circumstances, the statutory rights of lien, stoppage in transit and
resale offer the seller very limited protection against the buyer’s failure to pay the price.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 327.

Credit:
 ‘Credit is the lifeblood of the modern industrialised economy…’
Sir Kenneth Cork - Cork Report on Insolvency Law and Practice (1982), para 10.

 Defining what we mean by Credit:

‘…the provision of a benefit (cash, land, goods, services and facilities) for which payment is
to be made by the recipient in money at a later date…’
– Goode, Commercial Law (2009).

 Two forms of credit:

1. Loan credit
2. Sales/Supplier Credit

 To limit its exposure, a lender will erect a legal agreement to reinforce the borrower’s duty to
pay the debt. This is known as taking security.

Security:
 Where an individual or company enters into a transaction on credit, they may be required to
give security in order to guarantee their performance of the repayment obligations set down
in the terms of the credit facility.

 There are two main types of security:

1. Personal
“A personal security is a contract involving a third party whereby that third party
undertakes the responsibility to discharge a debtor’s debt in the event of a default.
 Guarantee (given by a Guarantor)
 Indemnity (given by an Indemnor)
So if the debtor defaults, the creditor can look to the guarantor or indemnor to honour the
debt on foot of the 3rd party contract between them.”
 2. Real
A real security gives the creditor an interest in the debtor’s property. Thus, if the main
obligation being secured is not honoured, the creditor can resort to that property interest
and have it realised (e.g. can sell or acquire the property to service the debt).

There are two types of real security:

- Possessory security – where the secured creditor holds possession of the assets which
constitutes the security. (eg; car service at garage)
- Non-possessory security – not dependant on possession by the creditor. The debtor
will remain in possession of the property which is the subject of the security interest.
(eg: a creditor has a mortgage over the debtor’s property but the debtor remains in
possession of the property).

Registration of security interests:

Possession of property gives the impression of ownership.
 Where a debtor is allowed to retain possession of property over which he has granted security
rights to a creditor (i.e. as part of a non-possessory security), he may appear to other third-
party creditors to be more creditworthy then he actually is.
 So subsequent creditors may be unaware of the fact that there is an existing security on a
property which takes priority over their subsequent interest under a new credit facility.
 To protect subsequent creditors from advancing credit facilities to a debtor who looks
financially sound because he has possession of property, even though that property is subject
to a security interest in favour of an earlier creditor, there are various statutory controls in
place
 These statutory controls require creditors to register their security interests in a series of
public registers as a means of providing third parties with notice of the existence of prior
interests

Equitable Charges -
“An equitable charge involves the debtor (chargor) granting the creditor (chargee) the right to have
designated property of the debtor appropriated to discharge a debt. It involves no transfer of
possession or ownership of the property.”

Re Bond Worth Ltd [1980] Ch. 228.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 545.

Equitable charges can be fixed or floating. A fixed (or specific) charge is one which attaches to the
property as soon as the charge is created or the chargor acquires the rights over the property to be
charged, whichever is the later.
The floating charge, which is not dedicated to any particular asset(s) but floats over a designated class
of assets, present or future, allowing the chargor to deal with those assets free from the charge as long
as it remains floating, is a more flexible instrument.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 545.

Fixed charge is anchored down by specific tangible assets (buildings etc). If the debtor went
insolvent, those assets would be sold for the benefit of the lender.
Floating charge = where the asset is a category but its value is not known. Floating charges
need to crystalise in order to become payable. Usually involve the appointment of a receiver
or liquidator. Whenever the appointment is made, whatever the value of floating charge is the
value of those assets at that particular point.

 The obvious advantage of the floating charge is that it leaves the chargor free to use and deal
with the charged property.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 546.

Quasi-Security:
A supplier of goods on credit terms can secure himself against the buyer’s inability to pay by
supplying the goods under an arrangement by which he reserves ownership of the goods until their
price is paid.
Examples include:
- Hire purchase agreements
- Finance leases
- Sale with Right to Re-Purchase
- Conditional Sales Agreements
A sale subject to a retention of title clause is a conditional sale and is expressly sanctioned by S19(2)
of the Sale of Goods Act 1893.

Retention of Title Clause

(a Conditional Sale Agreement) Title to the goods is retained by the seller until the goods are paid for
in full.
“Retention or reservation of title (ROT) clauses have become a significant feature of
commercial contracts for the sale of goods. They fulfil a security function of ensuring that
the seller gets paid before the property in the goods passes to the buyer.”

Forde M., ‘Commercial Law’, (4th ed, Bloomsbury Professional, 2020), at para [6.72].
“The main attraction of ROT clauses is that they provide sellers with extensive protection in the event
of buyers becoming insolvent before the goods are paid for.”
Forde M., ‘Commercial Law’, (4th ed, Bloomsbury Professional, 2020), at para [6.74].

“If the retention clause is not carefully drafted, it may be construed as a charge rather than as a full
reservation of title; in that event, the clause may be ineffective either as an unregistered bill of sale or
as an unregistered company charge.”
Forde M., ‘Commercial Law’, (4th ed, Bloomsbury Professional, 2020), at para [6.74].

It is imperative to note that retention of title clauses are not implied by Statute. Therefore, they must
be expressly provided for in the contract of sale.

“For there to be an effective reservation of title, it must be clear from the contract that the seller shall
remain owner of the goods until the designated condition has been satisfied.”
Forde M., ‘Commercial Law’, (4th ed, Bloomsbury Professional, 2020), at para [6.81].

There are three ways by which a ROT clause can be incorporated into a contract:
1. By signature - L’Estrange v Graucob Ltd [1934] 2 KB 394 = the plaintiff, L’Estrange,
contracted to purchase a slot machine for cigarettes from the defendant Graucob. The
agreement included an express clause saying that the agreement included all terms and
conditions to purchase the machine and any express/implied conditions are excluded. Court
upheld that.

2. By giving reasonable notice

 “Retention of title clause may be incorporated where the clause is made available, or
reasonable notice of the clause is given, to the buyer at the time the contract is made.”
Parker v South Eastern Railways Ltd (1877) 2 C.P.D. 416; Thornton v Shoe Lane
Parking Ltd [1971] 2 QB 163; Interfoto Picture Library Ltd v Stiletto Visual
Programmes Ltd [1988] 1 All ER 348 regarding unusual terms.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 329.

Sugar Distributors v Monaghan Cash & Carry [1982] ILRM 399. This case established the
following:

 In this case, the parties had commenced to trade in 1974. The retention of title clause was
initially included in 1977, prior to the dispute arising.

 “Carroll J referred to evidence given by the managing director of the buyer company that
although he never read the small print of the invoices, he did notice a change in the form
and size of the invoices. He further stated that it would have made no difference to him if
he had read the new invoice.”
 White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 329.

 The court held that reasonable notice had been given, therefore the retention of title
clause was successfully incorporated into the contract.

3. By course of dealings –

“Where the parties have contracted in the past and incorporated a retention of title clause, this
past ‘course of dealings’ may be enough to ensure that the clause is part of future contracts.”
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 330.

In the case of McCutcheon v David McBrayne Ltd [1964] 1 All ER 430, the need for what is
commonly referred to as a ‘consistent dealing’ came to the fore when the court stated that it is
a vital component in the success of an incorporation argument.

Types of ROT claim:

“Retention of Title clauses can be broken down into various types of claims.”
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 330.

1. Simple claim

‘Simple’ retention of title clauses, whereby a seller retains title until payment of the price of
the goods, are fully effective and do not require registration.’

Forde M., ‘Commercial Law’, (4th ed, Bloomsbury Professional, 2020), at para [6.86].

The cases of Frigoscandia v Continental Irish Meat [1982] ILRM 396 and Clough Mill Ltd v
Martin [1984] 3 All ER 982 established that a simple clause is legally effective.

In essence, a ‘simple claim’ refers to an individual or company retaining title to particular

goods or items supplied until such a time as they are paid for in full.

There are no registration requirements however, “the clause must retain legal title: it has been
held that a clause which retained “equitable and beneficial ownership” of goods supplied
allowed the legal title to pass to the buyer subject to the grant back to the seller of an
equitable charge, which was void for lack of registration.”
Re Bond Worth [1980] 1 Ch 228
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 331.

Frigoscandia v Continental Irish Meat [1982] ILRM 396 = a case where Frigoscandia had
supplied a refigeration unit to Continental Irish Meat. A receiver was appointed in the
 company. They wanted to repudiate the existence of a retention of title clause. The court
decided that the intention of the parties was clear and the clause itself is clear. The claim of
Frigoscandia was allowed to stand - A simple clause which retains title to the goods supplied
until they are paid for is legally effective.

Re Bond worth [1980] 1 Ch 228 = sold yarns and fibre (supplied by another company) which
were made into carpets. Included a clause which retained ‘equitable and beneficial
ownership’ of goods supplied. When someone starts saying that, they are allowing title to pass
to the buyer subject to granting back to the seller an equitable charge. A charge to be effective
has to be registered, yarn company hadn’t registered the charge so they failed in their attempt
of having that ROT clause recognised.

There are two types of Simple Clause:

- Type A – claim to original goods in their original form.
- Type B – Claim to original goods which have entered a manufacturing process.

Type A – claim to original goods in their original form:

A liquidator or receiver will oblige the seller to show that the price is unpaid and to identify
that the goods are the original goods supplied under the particular contract.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 332.

Bernard Somers v James Allen (Ireland) Ltd [1985] IR 340

 In this case, the defendant furnished animal feed to a particular company subject to a
simple retention of title clause.
 Upon the nomination of a Receiver it was established that the goods were an of
identifiable nature and had failed to be consumed by the manufacturing process.
 The Applicant (Receiver) argued that a ‘simple ROT clause’ was by no means
effective in a situation where goods are destined for a manufacturing process.
 Carroll J in the High Court held “that as long as the goods still existed in the same
state in which they were supplied, and as long as they had not been mixed with other
goods or transmitted into a manufactured product, then a simple clause would be
effective.”
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 332.

Type B - Claim to original goods which have entered a manufacturing process:

Where goods supplied under a sales contract, subject to a simple retention of title clause, enter
a manufacturing process, there is the risk that they will change their form such that they
cannot be identifiable as the goods originally supplied. However, if the goods supplied can be
identified as the original goods supplied and removed from the manufacturing process, the
seller may retain title to them by means of a simple clause.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 332.
 Hendy Lennox v Grohame Puttick Engines Ltd [1984] 1 WLR 485
 Seller supplied diesel engines on foot of a simple ROT clause which were ultimately
incorporated into generator sets.
 The court held that the engines remained in an identifiable state and could be
extracted without causing severe damage.
The outcome of this case was that the simple ROT clause was deemed effective and
the title to such goods ultimately rested with the seller.

Where the manufacturing process results in the sellers goods being irreversibly incorporated
into a new product, or loses their identity, they will cease to exist as an independent item and
the sellers title to the original goods will be extinguished.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 333.
Example:
Borden v Scottish Timber Products Ltd [1984] 1 WLR 485
 In this case, a seller of resin had their title extinguished. The resin was intended for
use in manufacturing wood sheeting. The court deemed the simple ROT clause
ineffective because the resin could not be identified or extracted without causing
severe damage to what it initially was.

Peachdart Ltd [1984] 1 Ch 131

 In this case, a seller supplied leather to be used in the process of making handbags.
The court held that although it was possible to pinpoint the leather, it was virtually
impossible to identify such material in its original form. They found that the title to
the leather was extinguished when it entered the production process and lost its
original identity and the simple ROT clause was ineffective.

2. Manufactured products claim –

“In order to overcome the above problem of the original goods supplied losing their identity
in a manufacturing process, retention of title clauses have been drafted to claim title to the
products manufactured using the original goods supplied.”

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 334.

Ultimately, it is presumed that if the buyer goes to the effort of manufacturing products, then
they will be his/her property. This is to eliminate the seller taking comfort in the work
conducted by the buyer throughout the manufacturing process.
 Where the seller’s ROT clause lays claim to the type of manufactured goods, it will normally
provide the seller with nothing more than a charge over the manufactured goods to secure the
sums owed to him, which if not registered is not enforceable.
See further, Webb, “Title and Transformation: Who Owns Manufactured Goods?”
[2000] Journal of Business Law 513.

Kruppstahl AG v Quitman Products Ltd [1982] ILRM 551

In this case, steel, which was intended to contribute to the manufacturing process, was
supplied under a retention of title clause. Upon the liquidation of the buyer, Krupps claimed
the remainder of used and unused steel. The court held that Krupps was entitled to the portion
of unused steel but not the used steel because their interest effectively constituted a charge
which was not enforceable as it had not been registered.

3. Proceeds claim - Claim to the proceeds of sale of the original goods supplied or subsequent
manufactured goods

If the buyer resells the goods on before paying for them, the seller’s rights over the
goods will normally be extinguished because the sub- buyer will take a good title to
the goods by virtue of section 25(2) of the 1893 Act- “buyer in possession” rule. To
overcome this problem, the seller may seek to claim an interest in the proceeds of the
resale.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 334.

A claim to proceeds will only be worthwhile where, the proceeds of resale are
received after commencement of the insolvency; if they are received before the
insolvency, they are likely to be lost in the buyer’s overdrawn bank account
(effectively untraceable)

Important caselaw:
Aluminium Industrie Vassen BV v Romalpa Aluminium [1976] 1 WLR 676
Aluminium supplied materials to Romalpa. Romalpa went into receivership. Very complex
ROT claim here where the seller tried to argue that there was a fiduciary relationship between
them and Romalpa. The court found that the preservation of ownership clause contains
unusual and elaborate provisions departing substantially from the normal debtor – creditor
relationship and shows the intention was to create a fiduciary relationship which means that
Romalpa had a duty to return the proceeds
 It can be inferred from this precedent that a seller’s proceeds claim can only succeed
if the seller can adequately demonstrate that their relationship with the buyer is
 fiduciary. This will thereby establish what is commonly referred to as a ‘right to trace
in equity’.
 Subsequent English cases have refused to find the requisite fiduciary relationship.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 335.

Criticism of Romalpa by Forde –

“In the seminal Romalpa case, the clause there was held to capture the proceeds of
sub-sales of goods, even though it did not in terms purport to do so and, additionally,
the question whether the clause constituted a registerable charge was never raised.”
Forde M., ‘Commercial Law’, (4th ed, Bloomsbury Professional, 2020), at para
[6.77].

Re Andrabell Ltd [1984] 3 All ER 407

 The fact that the buyer was allowed credit, and so could use the proceeds of sale in his own
business, negated the existence of a fiduciary relationship. Moreover, the buyer did not have
to store the seller’s goods or the proceeds of sale separately.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 335.

Compaq Computers v Abercorn [1991] BCC 484

 A comprehensively drafted clause which included all the apparently necessary phrases- buyer
stored as bailee and agent for seller; buyer to account in full for proceeds and keep proceeds
in separate bank account- was interpreted as creating a charge over the proceeds of the resale.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 335.

Tatung v Galex (1988) 5 BCC 325

 Judge (Philips J), at odds with Romalpa, said that even where a fiduciary relationship exists,
the clause may still amount to a charge over proceeds.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 335.

He went so far as to suggest that Romalpa had been wrongly decided and that the seller’s
interest should have been held to be a charge.
 Generally, it seems that the courts regard imposition of a fiduciary relationship as unreal, in
that such a relationship would entitle the unpaid seller to the whole of the proceeds of the
buyer’s resale, including any profit element. Instead, a clause which makes an express claim
to proceeds of resale is likely to be regarded as an assignment of future book debts, or a
charge on the proceeds of resale which will require registration as a charge or bill of sale.
 White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 336.

 De Lacy points out that more recent Irish authority has kept in line with emerging English
case law.
De Lacey, “The Anglicisation of Irish Retention of Title” (1990) 8 Irish Law Times 279.

Carroll Group Distributors v G & F Burke [1990] ILRM 285

Limerick case. G & F Burke were a cash & carry. Carroll group had supplied cigarettes
 In this case, the Court considered whether proceeds in a bank account were subject to a valid
retention of title clause.
 The court noted that the money in the account was in excess of the value of the supplier’s
claim mainly due to the premise of business mark-up.
 The court found that this pertained all the necessary characteristics of a mortgage or charge
which was deemed to be void for non- registration under s 99 of the Companies Act 1963.
It is unclear from the judgment to what extent this case is limited to its facts. In particular, the
aspect of the retention of title clause that provided that when the buyer resold the goods, it did
so on its own account and not as agent for the supplier, seems to be the basis for the court’s
finding that no fiduciary duty was imposed by the clause.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 336.

 Subsequent caselaw which has applied Carroll Group Distributors Ltd v G & JF Bourke Ltd
suggests that the case has a wider application and represents a shift away from the relative
ease at which fiduciary relations were found to exist in the context of proceeds of sale clauses
in sale of goods contracts in Ireland.

See also, ADM Londis plc v Ranzett Ltd [2016] IECA 290 at paras 65-75 on fiduciary duties
and retention of title clauses.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 336.

Unitherm Heating Systems Ltd v Kieran Wallace (Official Liquidation – ie Court Appointed –of
BHT Group Ltd (In Liquidation) [2015] IECA 191
Unitherm supplied goods to BHT for resale, subject to a retention of title clause which included a
claim to proceeds of sale. On liquidation of BHT, over €93,000 was due to Unitherm in respect of
goods supplied which had been sold on to third parties before the appointment of the liquidator. The
High court found that BHT owed a fiduciary relationship to Unitherm arising out of a relationship of
principal and agent and Unitherm was thereby held to be able to trace into the proceeds of sale. This
agency relationship was not expressly mentioned in the contract but instead was based on the conduct
of the parties.
On appeal, the Court of Appeal reversed the decision and found that the wording of the contract was
not compatible with an agency relationship. They also said that the conduct of the parties and
surrounding circumstances were not necessarily indicative of an agency relationship.
The COA found that BHT had granted a charge to Unitherm over the proceeds of sale which, in the
absence of registration under s.99 of the Companies Act 1963, was invalid and void as against the
liquidator.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 336-338.

Another attempt was made in Conmans Wholesale v J. Donohue Beverages Ltd [2019] IEHC 657 to
differentiate the precedential caselaw and successfully endear a claim to the proceeds of sale.

“Although there is earlier Irish precedent for a claim to proceeds succeeding, courts in Ireland today
seem most unlikely to uphold a seller’s claim to the proceeds of a buyer’s resale, and an insolvency
practitioner can be expected to contest strongly any such claim.”
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 338.

Final notes on ROT clauses:

- A seller will not normally seek to enforce a retention of title clause unless the buyer is
insolvent. A successful claim under a retention of title clause will remove the assets
claimed by the seller from the pool of assets available for distribution to other
creditors. Insolvency practitioners will therefore seek to resist a seller’s claim under a
retention of title clause, if at all possible. One standard argument put forward by
insolvency practitioners is that the clause was not properly incorporated into the sales
contract.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 329.

- There is now a substantial body of case law and extensive academic literature
surrounding retention of title clauses.
See e.g. McCormack, Reservation of Title, 2nd edn (London: Sweet & Maxwell,
1995); Wheeler, Reservation of Title Clauses: Impact and Implications (Oxford:
Clarendon Press, 1991).
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 330.

- The various aspects of the law relating to retention of title clauses are unclear. It must
be remembered that each case was decided on its particular facts and based on the
interpretation of each individual clause. Accordingly, case law may by less of a guide
than usual.
 White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 330.

All Sums Due Clauses:

 “provides that as long as any sum is outstanding, whether under the relevant supply contract
or otherwise, no property in any goods supplied can pass from the seller to the buyer. Once
the account between the seller and the buyer is cleared (i.e. all sums owing are paid), property
in any goods supplied, up to that point in time, will pass to the buyer.”
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 339.

 Entitlement to reclaim goods under a retention of title clause can be extinguished:

(i) when contract price is paid, or
(ii) when ‘all sums due’ (not just those under the contract) are paid.

The powerful effect of such a clause was upheld in the case of Armour v Thyssen [1990] 3 All ER
481
 This case represents the sole reported case on an ‘all sums due’ clause.
 Thyssen supplied steel strip to a Scots company, subject to a condition that the goods would
not pass until such a time that all debts owed to the vendor had been covered.
 Held: that an all-sums due clause was effective to prevent title passing to the buyer until
payment was made. Therefore, it can be inferred from this case that such a clause does not
create a charge.
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 339.

 The ratio for the decision has been rightfully questioned and further criticised by many
academics in the area, mainly on the basis that it was decided on a point of Scots law.
See e.g. Bradgate, “Retention of Title in the House of Lords: Unanswered Questions” (1991)
54 Modern Law Review 726.

“Insolvency practitioners still tend to resist claims under all sums due clauses, arguing that such
clauses allow property to pass to the buyer subject to a charge back in favour of the seller. They
should therefore be used with care.”
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 339.

Clough Mills v Martin [1984] 3 All ER 982

  “Simple clause under which the seller retained title to all goods supplied under a particular
contract until he received payment for all the contract consignment.”
White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 340.

 The English COA opined that such wording could give way to two issues in particular:
1. what if the buyer only paid for some of the contract goods before becoming insolvent;
should the supplier be allowed to repossess all the goods supplied including those
already paid for?
2. Who is entitled to any profit on resale by the seller after repossession should the
goods be resold for more than their original contract price?

 White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 340.

Goff LJ:
 stated that the position differed depending on whether the contract of sale remained in force
or not.
 Where the contract still existed, the seller would be restricted by an implied term in the
contract so that he could resell only so much as was necessary to discharge the unpaid
balance of the price. If he sold more, he would be accountable to the buyer for the excess.
 In contrast, after termination of the contract, the seller would be free from this implied term
and would be able to repossess and resell any of the goods in the buyer’s possession.
 However, the seller would have to refund the buyer any part of the price paid and
attributable to the goods resold, on the basis that there was a total failure of consideration
for which he had been paid (i.e. no contract existed). He could set off any sum to be so repaid
against any damages suffered due to the buyer’s breach of contract.

 White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 340.

L Donaldson MR: He suggested a slightly different solution.

 Based on a close analysis of the clause in question, he found that the seller could repossess
and resell the goods ‘until’ he had been paid in full. Any resale thereafter was accountable to
the buyer.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 340.

Observation from White:

  In favour of L Donaldson’s analysis, it might seem fairer that the seller should not be allowed
to make a windfall profit, and that any profit should go to benefit the general body of the
buyer’s creditors.
 However, it has been argued that Goff LJ’s analysis is more conceptually correct. Since the
goods repossessed by the seller are the seller’s property, because of the ROT clause, he
should be entitled to retain any profit on resale.

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 340.

Sales Law Review Group:

- In Ireland and England, proposals for change have been made but not implemented.
In 1989 the Irish Law Reform Commission reported on the problems of retention of
title clauses in the context of debt collection. The Commission proposed that retention
of title clauses should not be enforceable unless evidenced in writing and signed by
the buyer, and that such clauses would not be deemed to create any form of charge
over the goods unless expressly stipulated at the time the contract was concluded by
the parties. It further proposed the establishment of a system of registration of
retention of title clauses, while at the same time not ruling out, at some future date, a
more comprehensive registration system for other types of security interests in goods.
Neither the register for retention of title clauses nor the more comprehensive register
has been established.

Law Reform Commission, Report on Debt Collection: (2) Retention of Title (LRC
28-1989).

White F., ‘Commercial Law’, (3rd ed, Round Hall, 2021) at 340-341

- “The present law is in any event uncertain and has given rise to complex and
expensive litigation. In particular, the doubts as to whether retention of title clauses
can be availed of by an unpaid seller where the goods have been sold by the buyer to
a third party or have lost their identity by being used in the manufacture of, or mixed
with, other goods have caused unnecessary complications for all concerned.”

Law Reform Commission, Report on Debt Collection: (2) Retention of Title (LRC
28-1989) at [para 45].

- “The Commission believes that the law should be simplified and clarified in this area
by a provision that such charges are not to be deemed to arise unless the parties
expressly so stipulate.”
 Law Reform Commission, Report on Debt Collection: (2) Retention of Title (LRC
28-1989) at [para 47].

- “The Commission accordingly recommends that legislation should provide that:

(a)
a retention of title clause should not be enforceable unless it is
evidenced in a note or memorandum in writing signed by or on
behalf of the buyer; and

(b) such a clause should not be deemed to create any form of charge
over the goods or the proceeds of sale of the goods or over any
other interests in property, real or personal, unless it is expressly
so stipulated at the time the contract for sale is entered into
between the parties.”

Law Reform Commission, Report on Debt Collection: (2) Retention of Title (LRC
28-1989) at [para 47].

*Note – the Commission also made a number of other recommendations.

None of the recommendations have been implemented in Ireland as of yet.