Retention of Title and Vesting Clauses - Do they provide security over goods? [updated]

Michael Mendelblat

July 2016

A revised version of a paper originally presented to the Society of Construction Law at a meeting in London on 4th June, Belfast on 15th October 2013 and Birmingham on 21st January 2014

In 1976, in the Romalpa case, the Court of Appeal first accepted the possible effectiveness of a retention of title clause to prevent goods (and hence their value) being lost on the insolvency of a project party, and since then the law and construction contract practice have evolved significantly. Michael Mendelblat's paper Retention of Title and Vesting Clauses: Do they provide security over goods? was published in March 2014 (paper 185), but the law has evolved further, with significant Court of Appeal and Supreme Court cases, including the PST Energy. The author has therefore revised and updated his original paper, which summarises the complex law as it applies specifically to construction projects, including copious references to clauses in standard form contracts.

Introduction - The problem - Who is the owner? - The competing principles - Statutory protection for sub-buyers of goods - The Rompalpa case - Types of clause - Case law in construction - Some problem areas - Vesting certificates - What is the optimum position for a subcontractor in a retention of title dispute? - The employer's optimum position - Vesting clauses and the Belmont case - Cases referred to in the Belmont judgment - Are the standard forms vulnerable? - Conclusions.

The author: Michael Mendelblat is a solicitor and a professional support lawyer specialising in construction at Herbert Smith Freehills LLP: michael.mendelblat@hsf.com.

Text 19 pages.