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Commercial Law Dissertation Proposal

Info: 1553 words (6 pages) Dissertation Proposal
Published: 21st Jun 2019

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Jurisdiction / Tag(s): UK LawCommonwealth law

The Retention of Title Clauses – ‘a maze if not a minefield.’

Aims of commercial law

    • To evaluate the effectiveness of the use Retention of Title (ROT) Clauses under UK Commercial Law and ask whether the proposed harmonization throughout the EU is necessary.
    • To determine whether there are better systems of law that promotes the protection of the seller from non-payment through the use of ROT clauses, for example a codified system such as the US, Canada and New Zealand.
    • To propose that there needs to be a reform of ROT clause under UK Commercial Law through a statutory system of protection for both the buyer and seller. Objectives:
    • To explore the ROT clause decisions made by the UK courts in order to understand how the system of Commercial Law works in the UK. In order to determine the validity and effectiveness of the UK system in respect to protecting both the interests and rights of both the buyer and the seller.]
    • To compare the UK’s ROT clause case law with that of the ECJ’s. In addition to considering the possibility of reform proposed in the UK and throughout the EU.
    • To examine the different systems of Commercial Law to examine the most effective protection of ROT clauses. It will explore codified systems of law, such as Canada, the USA and New Zealand, and compare them with common law systems, such as the UK and Australia. The main objective of this examination is to determine which type of system is most effective in protecting the rights and interests of both the buyer and the seller.

Central Question

‘A maze if not a minefield’ means that the law is so confusing that it is very hard to determine the rights of the buyer and the seller and even if a ROT clause seems valid it does not necessarily mean that the seller’s interests will be upheld by the courts. Therefore the UK law seems to create a series of pitfalls for the seller when enforcing Retention of Title (ROT) clauses therefore this exploration will ask the central question:

“Is the UK’s system of Commercial Law effective in protecting/enforcing ROT clauses?”

In order to do this the discussion will also consider the following questions:

    • Whether there is a better system of law?
    • Whether there is consistency in the current UK case law in comparison to other systems of law?
    • Does the current UK in comparison to other systems of law overprotect the buyer or the seller?
    • Finally should ROT clauses be upheld when there are other routes for the financial interests of the seller to be protected?


A Retention of Title (ROT) clause is used to protect the seller from buyers who do not pay for goods received. This is a clause for sellers to recover their goods if they do not pay, where the clause has to be within the terms and conditions of sale. They are also known as Rompala Clauses after the case of Aluminum Industrie Vassen BV v Rompala Aluminum Ltd [1976] . The main problem with ROT clauses is that when the seller comes to enforce them in many cases they are not upheld. The ROT must be expressly held in the terms and conditions and cannot be implied like many clauses in sales of goods, e.g. quality of goods or previous dealings. The ROT must be expressly written in the terms of sale and can be as simple as the title of the goods does not pass on to the seller until the goods are paid in full. The ROT is usually very detailed and the courts interpret them on a sentence to sentence basis to ensure that the buyer’s rights are not being adversely affected .

The ROT clause is not used in all industries because with perishable items because the goods are no longer of use, whereas with large or expensive non-perishable items, such as cars or electronics an ROT clause is much more sensible. This is usually seen in instances of hire-purchase agreements, where in lieu of payment of good the company can reclaim the sold goods. The ROT must be part of the contract and therefore follow the valid form of a contractual clause and must be a part of a valid contract. Therefore the best route of action is to have the buyer to acknowledge the clause and sign in confirmation of the clause, rather than having it as a mere term and condition that is available on request and the buyer never sees the clause. It needs to be clear and express where both parties understand that if the goods are not paid in full then the seller can retain the goods. The problem of ROT clauses is whether they can be upheld only when follow the strict rules concerning whether they are express and the buyer had certain knowledge of their existence and are determined fair. If they are determined to be valid then in the case of insolvency they are the head of the distribution chain as per the SOGA 1979 Part V, which was confirmed in Borden v Scottish Timber Mills [1981] .

There are problems with ROT clauses is that if the goods are not identifiable and traceable in their original form then the goods cannot be reclaimed under the common law ; however under equity mixed goods can be reclaimed. This creates confusion under UK law in respect to what goods can be reclaimed by the reseller because under common law as opposed to equitable actions there is contradicting precedents. This contradiction points towards a need for there to be reform. Under the US, Canadian and New Zealand systems of law they have set up codified system of ROT clauses, for example Article 9 of the Uniform Commercial Code in the USA. In the UK there is the added problem of Article 220 of the Treaty of Rome which subjects UK law to the precedent of EU law and the moves towards harmonization of ROT clause throughout the EU . There is a need for reform especially in respect to recent developments in security law and the protection of interests, especially in respect to recent changes in insolvency law. This has been highlighted in Ireland’s 1989 Law Commission Report also that common law system’s need to be reformed to coincide with a more codified system of law otherwise the law is a confused mess, i.e. a maze if not a minefield.


This exploration will be concerned with the practical application of law to theory in the first three chapters this exploration will explore the history and use ROT Clauses in the UK. The first Chapter will consider ROT’s – History and Use in the UK. The Second Chapter will consider the use of the ROT in the Modern Era in the UK. The third Chapter will consider the Problems and Benefits of the ROT in the Current UK system. It will then focus on four case studies, which will consider the case-law and differing judicial system’s approach to ROT clauses. The first case study will compare the Use of the ROT in the UK and the EU in which this chapter (Chapter 4) will explore the supremacy of the EU law and the propositions for harmonization throughout the EU. The second case-study will explore ROT Cases in Codified Systems of Law, in Chapter 5 ROT cases in the US; Canadian; and New Zealand judicial arenas will be discussed in comparison to the UK. This third case-study in Chapter Six will be a Comparative Case Study of ROT Law in different Judicial Systems, i.e. what approach have other common law systems taken, c.f. Ireland and Australia. This case-study will conclude with a consideration of the different approaches of ROT case law in codified and common-law systems; as well as reform in common-law systems to determine the most effective approach of reform. The final two chapters will consider the theoretical need for reform in respect to the protection of the buyer and seller. Chapter Seven will discuss the current movements to protect the buyer as well as reforms in Insolvency law within the EU and ask the question ask Are ROT Clauses Necessary in UK law, especially when there are other forms of seller protection. The final chapter will conclude whether ROT Clause Reform is Necessary under UK Law by evaluating the theoretical problems and the comparative research of other jurisdictions to determine the effectiveness of ROT clauses in the UK and asking whether they are a maze if not a minefield.


    • Young, 2002, Protecting and Registering Company Charges and Other Securities Part 1 & Part 2, 152 NLJ 1353 & 152 NLJ 1389
    • Singleton, 1999, In Focus – The Passing of Risk and Title, CLT 22 10
    • Rawlings, 2005, Recognition of Administration Proceedings Under EC Regulation, 21 IL and P 159
    • Beale, 2004, Reform of the Law of Security, Journal of International Banking and Financial Law 117
    • Burton, 2005, A Summary of some Key Points in R3’s Response to the Law Commissions Proposals on Security Interests, 21 IL and P 69
    • Ireland’s Law Commission, 1989, Report on Debt Collection and Retention of Title, Law Reform Commission

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