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buyer, is neither valid nor does it normally oblige the buyer to inform the seller that he does not agree to the clause.106

(d)The parties agreed upon the clause prior to the delivery of the goods to the buyer and the seller has, therefore, lost his or her right of stoppage in transit. If the agreement is made after delivery, it is valid as between the parties, but it does not protect the seller against the creditors of the buyer.107

(e)There are no essential formalities required for a retention of title clause to be valid. The clause can be contained in the seller’s general conditions. The parties can even agree upon the clause orally, although this may, of course, give rise to difficulties of proof.

Parties are not obliged, nor able, to register retention of title clauses. Even if a duty or option to register existed, registration would not be a prerequisite for the validity of the clause.108 A title retention clause can be valid, therefore, even if the buyer was, incorrectly, registered as the owner. In such cases, bona fide third parties can, however, often claim protection against the seller.

Comparative observations

Case 3 involves what is known as simple retention of title, excluding all possible difficulties arising from resale, manufacturing, commingling, etc. Considering the difficulties which the European Union has faced up to now in its attempts to harmonise this area of the law,109 the similarities revealed by the national reports are in fact striking. One must note, however, that this harmony is of a relatively recent date.

Parts (a) and (e)

All jurisdictions conclude that it is possible to reserve title until full payment of the purchase price. There is no longer a difference between

106See e.g. Tepora, Omistuksenpidätyksestä 209--210 and Tuomisto, Omistuksenpidätys ja leasing 160 ff.

107See e.g. Tuomisto, Omistuksenpidätys ja leasing 181 ff.

108See e.g. Koulu, Oikeustiede -- Jurisprudentia 1987, 183 ff. Title retention to cars, buses, trucks-aircraft, aircraft under construction, vessels, vessels under construction, etc., may be registered, but registration is never a prerequisite for the validity of title retention.

109See Introduction, pp. 22 ff.

those systems which require a separate real agreement and those which do not.110 The dogmatic difficulties which retention of title poses in a consensual system have been overcome even in French law and the jurisdictions influenced by French legal thinking. The translative effect (effet translatif) of the contract is considered to remain under the suspensive condition of full payment whereas the rest of the contract, especially the duty of the buyer to pay the price, is regarded as fully operative.

With the exception of Swedish and Finnish law, all jurisdictions regard the seller who has reserved title as the owner of the goods. In an execution carried out on behalf of a third-party (unsecured) creditor of the buyer, the seller is given the right to enforce his ownership through rei vindicatio as against any opposing rights of such creditors. Swedish and Finnish law take a slightly different view, influenced by their general mistrust of the suitability of legal concepts such as ownership. In both jurisdictions, the seller under retention of title may terminate the contract and claim separation of the goods. However, in the (unlikely) event that the value of the goods exceeds the value of the seller’s claim, the seller must account for this surplus. Also in Finnish law, the seller has only a right to preferential payment out of the proceeds of sale of the goods when the Act on Instalment Sales applies. In both systems, the seller has therefore merely a security right that is, in theory but perhaps not in practice, less than full ownership.

With the exception of Belgian, Italian and Spanish law, the enforceability of the seller’s title as against an executing creditor is not subject to any formal prerequisites or any requirements as to publicity. In Belgium, the clause merely needs to be in writing, in Italy and Spain the agreement also has to carry a ‘certain date’ (data certa, article 1524 C.c.; fecha cierta, article 1227 C.c.). In Spain, the usual method of satisfying the requirement of a ‘certain date’ is through the use of a public deed. If the contract is subject to the Spanish Ley de Ventas de Bienes Muebles a Plazos, the effectiveness of the retention of title will also depend on registration.111

In the buyer’s insolvency, all systems under consideration have come to accept the effectiveness of retention of title. France introduced this rule in 1980, Belgium in 1998 and Greece in 1987 by a change in case law. In addition to the formal requirements of Belgian, Italian and Spanish law already mentioned, French and Portuguese law also require a written

110See supra, comparative observations, case 1(a)(ii).

111See Hellmich, Kreditsicherungsrechte in der spanischen Mehrrechtsordnung, 164.

even the requirement, of registration of retention of title in respect of certain equipment does not concern the effectiveness of the security right.

Part (b)

Although some reporters suggested a more common wording, or some additional clauses, the terms used in case 3 were generally considered to be sufficient.

Part (c)

According to German and English law, the seller can withhold ownership also by means of a unilateral declaration to the effect that he only wants ownership to pass at the moment of full payment. This declaration must be made prior to delivery since otherwise § 929 BGB and section 18 of the Sale of Goods Act, respectively, dictate that ownership will pass. The same is also possible under French law since the 1996 amendment of the Insolvency Act. In fact, a retention of title clause is automatically implied into every sales contract under French law unless the parties explicitly exclude it by mutual agreement. This was a reaction against court decisions, which took an unduly narrow view of the requirement of agreement. Whether the reaction is to be regarded as excessive is for French commentators to decide. From the comparative perspective it is unique.

All systems, excepting the three just mentioned, require an agreement between seller and buyer for retention of title to be effective. It is again interesting to note that this rule, as well as its exceptions, cuts across the differences in respect of the general rules on transfer of ownership.

Part (d)

In the majority of the EU Member States and in South Africa, retention of title must be established prior to the delivery of the goods. It is important to note that (with the exception of Ireland) the crucial point in time is not the conclusion of the contract but delivery, although this is only logical for the tradition systems, not for those which adhere to the principle of solo consensu. That delivery brings to an end the possibility of providing for retention of title seems to stem from the prohibition of the security transfer of ownership and the mistrust of non-possessory

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security rights in general. Correspondingly, it is unsurprising that England and Germany are the only jurisdictions where retention of title may be established even after delivery without a need to meet any publicity requirements.113 This finding accords with the liberal attitude that both systems take with regard to security rights in general and -- related to this -- with their view that factual possession is virtually immaterial.

113Swedish law also allows a retention of title or a reservation of the right to rescission to be established after delivery. This, however, requires first a resale to the former seller which has to be registered under the Bills of Sales Act.