Retention of title claims in administration
For an unpaid supplier, a valid ROT clause is the difference between getting the goods back and joining the unsecured creditor queue for pennies in the pound. Here's what English law actually enforces.
Title stays until those specific goods are paid for. Enforceable — no registration needed.
Title contingent on payment of all sums — often treated as a charge, void without s.859A registration.
Claim over new products made from supplied materials — almost always unenforceable per Borden.
The ROT claim process
- 1. Supplier writes to the administrator identifying goods, invoices, and the ROT clause.
- 2. Supplier requests inspection of stock to confirm identification.
- 3. Administrator reviews contract and clause, and validates identification.
- 4. Where accepted: goods released or, if sold, proceeds paid to supplier.
- 5. Where rejected: supplier applies to court under Sch B1 para 43 for permission to lift the moratorium.
Why the moratorium matters
The Sch B1 para 43 moratorium prevents the supplier from turning up and grabbing goods off the buyer's premises without consent. This is often perceived as unfair by trade suppliers, but it exists to protect the going-concern value of the business during the administrator's rescue period.
The trade-off: the administrator must deal fairly with the ROT claim, and if they sell the goods the supplier's ROT extends to the proceeds. See our secured vs unsecured creditors guide for how ROT fits alongside secured claims.
Frequently asked questions
What is retention of title (ROT)?
A clause in a supply contract that keeps ownership of goods with the supplier until the buyer has paid for them. If the buyer enters administration or liquidation before paying, the supplier can (in principle) reclaim the goods.
Is ROT enforceable in the UK?
Yes for simple ROT (Armour v Thyssen Edelstahlwerke AG [1990] 3 All ER 481). Extended and aggregation clauses are treated as registrable charges under s.859A CA 2006 and are usually void against an administrator or liquidator unless registered — see Clough Mill v Martin [1985] 1 WLR 111.
What are the three types of ROT clause?
(1) Simple ROT — title passes on payment for those specific goods. (2) Extended (or 'all monies') ROT — title passes only when all sums due from the buyer are paid. (3) Aggregation ROT — supplier claims title over new products made from the raw materials supplied. Types 2 and 3 are often unenforceable without registration.
What does the supplier need to prove?
(a) Valid ROT clause incorporated into the contract; (b) the specific goods on site are identifiable and belong to that contract; (c) the invoices for those goods are unpaid; (d) the goods have not been sold on or mixed with other materials in a way that destroys identity.
How does the administrator handle ROT claims?
The administrator issues a moratorium under Sch B1 para 43 that prevents the supplier from repossessing goods without the administrator's consent or a court order. In practice, the administrator reviews the ROT claim documentation, agrees or rejects it, and either releases the goods or pays for them out of realisations.
Can goods be sold before the ROT claim is resolved?
Yes — the administrator can, with the supplier's consent, sell ROT goods and pay the supplier from the proceeds. If the supplier refuses, the administrator can apply to court under para 71 for permission to dispose of the property free of ROT (and pay the value into the estate).
What if the goods have been mixed or converted?
Simple ROT is usually lost. Aggregation clauses attempting to claim the new product are almost always unenforceable (Borden (UK) Ltd v Scottish Timber Products [1981] Ch 25). The supplier becomes an unsecured creditor for the price of the raw materials.
What documentation do administrators expect?
The written supply contract or terms & conditions showing the ROT clause; proof it was incorporated (order confirmation, delivery note referencing terms); unpaid invoices; identification of the specific goods (batch numbers, serial numbers, delivery notes).
Is registration at Companies House necessary?
Not for simple ROT (Armour v Thyssen). Extended and aggregation ROT operate as charges over the buyer's assets and, per s.859A CA 2006, must be registered within 21 days of creation to be enforceable against an administrator.
Where can I read the leading cases?
Aluminium Industrie Vaassen BV v Romalpa [1976] 1 WLR 676 (the 'Romalpa case'); Clough Mill v Martin [1985] 1 WLR 111; Armour v Thyssen [1990] 3 All ER 481; Borden v Scottish Timber [1981] Ch 25; Re Peachdart Ltd [1984] Ch 131 (aggregation).