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| Terms of Trade – Retention of Title |
In light of the large number of companies going into administration or receivership recently, the importance of Retention of Title clauses (‘ROT’) has become increasingly apparent. Trading corporations should review their trading terms on a regular basis. The risk of becoming an unsecured creditor of an insolvent company is minimised if trading terms:
- are agreed to in writing by customers;
- include an "all monies" ROT clause which:
- requires the proceeds of the sale of any ROT goods to be placed into a separate account, in trust, until payment in full; and
- requires that all ROT goods are kept separate and easily identifiable from other goods until payment.
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