Retention of Title Clauses UK: Construction Supply Guide

What this document is

A Retention of Title clause is a contractual term, usually sitting inside a supplier's standard terms and conditions of sale, which states that title to the goods does not pass to the buyer on delivery. Instead, title is held back until a specified trigger, normally full payment for that consignment or for all sums owed on the account.

The physical goods still move. Possession, risk and the right to use the goods are separate legal concepts from title, and each of these can be dealt with differently within the same contract. The usefulness of the clause comes at the moment of insolvency.

If the buyer goes into administration or liquidation owing money for goods that are still identifiable on site, the supplier can potentially reclaim those goods rather than join the queue of unsecured creditors. The clause takes its common name from Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd, where the Court of Appeal first gave proper effect to this kind of provision under English law.

Sale of goods law in England and Wales, particularly the Sale of Goods Act 1979, expressly permits parties to agree when title passes, which is what makes these clauses workable in the first place.

How to use this document

1. Draft the clause into your standard terms. The protection only exists if the clause forms part of the contract. That means incorporating it into your written terms of sale before the buyer places the order, referencing it on quotations and order acknowledgements, and making sure your signing or acceptance process captures it. A clause slipped onto the back of a delivery note after the contract is already formed is unlikely to bind the buyer.
2. Decide between a simple and an all-monies clause. A simple clause retains title until that specific consignment is paid for. An all-monies clause retains title until the buyer has cleared every invoice on the account, which is more practical on sites where multiple deliveries arrive week by week. All-monies clauses have generally been upheld by the English courts and are usually the stronger commercial option for construction suppliers.
3. Keep the goods identifiable. Your clause is only useful if you can actually point to the goods and say 'those are mine'. That means marking pallets, batches or units where possible, keeping clear delivery records tied to specific invoices, and asking the buyer to store your goods separately where the contract allows. Once your materials are mixed with someone else's stock, identification becomes a real problem.
4. Watch out for fixtures and incorporation into the works. This is where construction is different from ordinary trade supply. Once bricks are laid, cables are chased into walls or steel is welded into a frame, those goods typically become part of the land or the finished product, and your title is extinguished. The clause protects you up to the point of incorporation, not beyond it. Invoice and chase payment before that moment arrives.
5. Act quickly if the buyer becomes insolvent. If the contractor enters administration or liquidation, you need to notify the insolvency practitioner in writing, assert your title, and arrange inspection and recovery of unused goods still on site. Delay is fatal here: once materials have been used, sold on or mixed, your claim effectively evaporates. Most suppliers who lose out on Retention of Title claims lose because they moved too slowly, not because the clause was badly drafted.

Common questions