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How to recover goods that haven’t been paid for

Businesses are facing a whole host of different challenges and now more so than ever, you may have found yourself in a situation where you’ve supplied goods to another business that haven’t been paid for.  

This guide looks at suggested courses of action if this has happened to you, and considerations to be mindful of, so that you can attempt to recover your goods with the support of a business dispute solicitor and put processes in place to try and avoid these kinds of situations arising again in future. 

Investigate: why haven’t you received payment? 

The very first thing you should establish is the reason behind the lack of payment, so that you’re fully aware of the situation you’re faced with and can take appropriate action – and seek legal advice depending on what you discover – if it looks like you’ll need to in the circumstances. 

If you’re met with a wall of silence from your customer after the time for which an invoice is payable has expired, then alarm bells may start to ring – particularly if your working relationship is historically good, in cases where you’ve traded with the business in question before. 

If you’re not receiving a satisfactory (or any) response from the company’s Accounts Department or senior management as to why the invoice remains unpaid, it may be time to start thinking about whether you can recover your goods. This will of course depend on the nature of the goods, i.e. whether they are still physically in a form that could actually be recovered. 

Can you rely on a retention of title clause? 

A retention of title clause is a mechanism in law which may entitle you to recover the unpaid-for goods. It’s a contractual clause which has the effect of legal ownership of the goods remaining yours (as the supplier) until the items are paid for in full. This usually means that you have the right to remove them from your customer’s premises if your invoice hasn’t been settled. 

What is the point of a retention of title clause? 

The benefit of including a retention of title clause in your commercial contracts is primarily to protect you, in circumstances where the goods aren’t paid for or your customer becomes insolvent. In the event of insolvency, the existence of this kind of clause may well give you a degree of priority over the company’s unsecured creditors and so a better chance of getting a return. 

Check your trading terms 

It’s important for you to be aware of the fact that, in order for any retention of title clause to be effective, your customer must be aware of its existence. Adding a clause of this nature to your general trading terms and conditions is strongly recommended, and you’re legally required to bring the term’s existence to a customer’s attention prior to the start of your business relationship with them. In other words, it must be a level playing field where both you and they are aware of the clause’s presence in your trading terms. 

How can you prove that your customer was aware of the retention of title clause? 

It’s recommended best practice to have all of your contractual arrangements in writing. So far as the retention of title clause is concerned, it’s suggested that you ask the customer to provide a signature or at the very least, an email or letter bearing their business details, clearly setting out that they’re aware of the clause and agree to it. 

What are the different types of retention of title clauses that can be used? 

It is strongly advised that you seek legal advice from experienced commercial solicitors to assist with drafting the right type of retention of title clause for the bespoke needs of your business. Below is a summary of the main types of clauses which can be used, by way of an overview: 

  • Simple: A simple retention of title clause provides for the legal and beneficial title to the goods in question remaining yours until they’re paid for in full. If they’re not paid for in full, you’re entitled to recover them from your customer. On a note of caution, this is only effective if the customer sticks to their duty of care to guarantee that the goods remain in the same condition as when they were sold to them, which can be tricky to enforce. 
  • All Monies: The wording of this clause should clearly specify that title to the goods is retained by you until all payments due to you are made in full. This applies not only to the goods you wish to recover, but also to any other goods you’ve supplied to your customer. Absolutely everything supplied by you must be paid for before legal ownership passes to them. 
  • Proceeds of Sale: The effect of this type of clause is that the proceeds of any sale would be set aside to be held against the retention of title clause. These kinds of clauses are notoriously complicated and difficult to enforce. 

Other, more complex types of retention of title clauses do exist (for example, a mixed goods clause); but as a rule of thumb, the more complicated the clause is, the more difficult it is to enforce. 

What if you don’t have a retention of title clause in your contract? 

In this scenario, legal title for the goods passes to the customer upon delivery. Enforcement upon non-payment then becomes much more difficult. 

Identifying and recovering goods 

To recover your goods from a customer, it’s vital that you’re able to properly identify them as yours. Suggested practical tips are to make sure that, before you supply them, you mark thegoods themselves with something easily identifiable – for example, a barcode/serial number, so that you can identify them easily if recovery is required. 

What if the goods you supplied have entered the production process? 

Once goods enter the production process, the effectiveness of any retention of title clause generally falls away as unenforceable, which means that in practical terms, you won’t be able to recover the goods. 

What if the goods you supplied are perishable? 

Once the period for payment for perishable goods has expired, the goods will almost certainly be classed as unrecoverable due to spoiling. A retention of title clause in these circumstances is of limited effectiveness as a result. 

What if the goods have been sold? 

You might be able to rely on your retention of title clause to allow you to legally recover your goods from the third party they’ve been sold to, but it can be complex. Whether you can do this will depend on the specific wording of the clause itself and it’s highly likely that you’ll require the intervention of the courts to potentially interpret and enforce the clause.  

What legal actions can you take to recover unpaid goods? 

The legal options available to you when it comes to recovering unpaid goods will very much depend on the financial situation your customer is in, as well as the factors mentioned above under ‘Identifying and recovering goods’, so getting to the bottom of the company’s financial position is wise before you take any steps.  

Some retention of title clauses permit you to enter your customer’s premises as part of the recovery process – depending on the nature of the goods, the practicalities of this may be more straightforward in some industries than others. This could be the best option if your customer isn’t in financial difficulty, but it’s advisable to seek assistance from a solicitor to be certain that any clause relating to entering the place where the customer has stored the goods you supplied is very carefully drafted. 

If you become aware that the customer is seriously struggling to the point that they’re taking steps towards insolvency, it’s crucial that you make contact with the company’s liquidator (the appointed insolvency practitioner) and seek legal assistance as soon as possible. There are unfortunately no guarantees that the liquidator will not challenge the clause. If they do so successfully, you’ll join any other unsecured creditors of the company. 

How can businesses protect themselves from non-payment risks?

The key thing to remember is that, more often than not, having clear and properly drafted trading terms and conditions in your commercial contracts is the best way of preventing or minimising the risk of future situations where you’re left without payment for goods. This of course includes retention of title clauses, which, as demonstrated in this article, can prove tricky to get just right, and will vary depending on the nature of your business and the goods you’re supplying to customers. 

International considerations for unpaid goods 

Supplying goods to international customers can add another layer of factors to think about if your customer doesn’t pay. As well as the considerations we’ve discussed, there are practical matters to give thought to in terms of physically retrieving the goods and how you’ll go about that, taking into account the geographical distance and possible jurisdictional issues between the law where your company is based and your customer’s location. Again, the terms and conditions in your contract will be the starting point for figuring out whether recovering the goods will be possible on several levels. 


The need to take steps to try and safeguard your business against being unable to recover goods that remain unpaid for should be a top priority before you enter into new business relationships. Getting the right retention of title clause drafted and inserted into your trading terms is key, along with properly labelling goods prior to dispatching them and highlighting the clause’s existence to your customers at the very beginning of that relationship. Our team of skilled business dispute solicitors can help you with both the drafting of, and the enforcement of, the right retention of title clause for your company’s requirements, as well as advising you fully if things do go wrong. 

What next?

Get expert legal advice from our team of business dispute solicitors. Get in touch with us on 0800 689 1700, email us at or fill out the short form below with your enquiry.

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