Cerno.org Newsletter – Retention of Title

Retention of Title

The Court of Appeal of England and Wales has ruled in the recent case of PST Energy 7 Shipping LLC Product Shipping & Trading S.A. v O.W. Bunker Malta Ltd and others [2015] EWCA Civ 1058 that a retention of title clause prevented a contract from being a sale of goods contract. Although the case was decided in the context of shipping, producing direct implications for ship owners, it is likely to have wider implications for retention of title clauses in the context of the supply of goods contracts.

In the PST Energy 7 Shipping case, the contract included a clause that, pending payment, the ship owner held the fuel as a baillee but was able to continue using the bunker.  This did not release the ship owners from their obligation to pay for the fuel.

Overall, as reported, this decision has implications for contracts for the supply of consumable goods where a retention of title clause provides ever diminishing security for payment.