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

Michael Mendelblat

March 2014

A paper presented to the Society of Construction Law at meetings in London on 4th June, Belfast on 15th October 2013 and Birmingham on 21st January 2014.

Note: an updated version of this paper was published in July 2016 and is available in PDF format only.

Michael Mendelblat considers the range of retention of title clauses commonly encountered and the extensive case law since the seminal decision of Romalpa. He discusses the various factual situations which the cases have addressed. He identifies the optimum positions for a supplier and sub-purchaser, usually a subcontractor and employer respectively. He addresses the Belmont case decided by the Supreme Court in 2011 and the relationship of the anti-deprivation principle to vesting clauses. He discusses the different types of vesting clauses currently found in construction contracts and the impact of the anti-deprivation principle on them.

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? - Conclusion.

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.