A retention of title clause? Smart. But don't forget the evidentiary clause

A retention of title clause only truly protects you against non-payment if you can also prove that a product belongs to you. With identical products that mix with those of other suppliers (improper commingling), this is often no longer possible, leaving you empty-handed. A proof clause in your general terms and conditions shifts that burden of proof to your customer, making your retention of title much more enforceable – even in the event of bankruptcy.

Many suppliers include a retention of title clause in their general terms and conditions to protect themselves against non-payment. Ownership of the delivered goods then only transfers once the customer actually pays the invoice. It sounds foolproof. However, in practice, things often turn out differently, because having a retention of title clause on paper is quite different from actually getting your product back. Below, you can read where things go wrong, how a proof clause resolves this, and what concrete steps you can take.

What is a retention of title?

A retention of title is an agreement whereby you, as the supplier, remain the owner of the delivered goods until the customer has paid in full. If the customer fails to pay, you can, in principle, reclaim your own goods, instead of being left with an unpaid invoice and nothing in hand.

It is therefore one of the strongest securities that an entrepreneur can easily include in their terms and conditions: you do not need to establish a pledge or draw up a separate deed for it. However, its value stands or falls on one thing: can you prove that precisely this product was supplied by you?

The pitfall: improper commingling

As long as the product can be reliably identified , problems rarely arise. Therefore, ensure that you record as many specifications as possible on your quotation and invoice – such as the type, color, dimensions, or serial number of the product.

However, even that does not always provide a solution. Suppose your customer sources exactly the same products from different suppliers and they are mixed together in the warehouse. In that case, it is no longer possible to determine which item belongs to you and which belongs to someone else. This is called improper commingling: the products are still recognizable as a type individually, but can no longer be assigned to a specific supplier individually.

The consequence is annoying. The burden of proof rests on you as the supplier: you must demonstrate which goods are yours. If you fail to do so, you cannot substantiate your retention of title and are left empty-handed.

Practical example. You supply 500 identical packaging boxes to a wholesaler who also purchases the same boxes from two other suppliers. In the event of non-payment, you want to recall your boxes, but 1,500 virtually identical copies are mixed together in the warehouse. Without an additional agreement, you cannot prove which boxes are yours – and you miss out.

How does a evidentiary clause shift the burden of proof?

This is where the evidentiary clause (also known as an evidentiary agreement) comes into play. With an evidentiary clause, you agree with your customer on a different distribution of the burden of proof. Specifically, you create a presumption that if items of the same type are present at the customer's premises, these items belong to you until the invoice is paid.

Does the customer dispute that? Then *he* must now prove the contrary himself. This reverses the situation: it is not you, but the customer who faces the evidentiary issues of improper commingling. In this way, you make your retention of title much more enforceable in practice.

Please note: in principle, parties can agree on the burden of proof, but such a clause is not unlimited. The judge assesses whether the clause is reasonable and takes into account the position of the other party. Moreover, stricter rules apply to consumers than in a purely business-to-business (B2B) relationship. Therefore, have the wording tailored to your target audience.

Extended and expanded retention of title: what is the difference?

A "standard" retention of title only covers the invoice for the relevant delivery. In practice, you often want more. Two commonly used variants:

• Extended retention of title – the retention applies not only to the outstanding invoice for this delivery, but as long as there are still outstanding invoices from earlier or other deliveries. This way, you remain the owner until everything has truly been paid.
• Extended retention of title – with this, you try to ensure that your security continues if the customer processes, modifies, or resells the product, for example through a claim against the purchaser. This requires legal precision and does not work in all situations.

Which variant is suitable depends on your product and your supply chain. Have an assessment carried out on a case-by-case basis to determine what is feasible and sustainable, especially for resale or processing.

Does a proof clause hold up in the event of bankruptcy?

You want to be in a strong position, especially in the event of your client's bankruptcy. A trustee is then appointed to settle the estate and attempt to satisfy the creditors as best as possible. Trustees frequently take a critical stance when a retention of title clause is invoked, particularly when commingling is involved.

In principle, a bankruptcy trustee is bound by the agreements entered into by the bankrupt prior to the bankruptcy. A validly agreed evidentiary clause forms part of this and can therefore, in principle, also play a role vis-à-vis the trustee. By doing so, you increase the chance that you can still exercise your retention of title during bankruptcy. Whether an appeal succeeds ultimately depends on the specific circumstances and the exact wording of your conditions.

If you wish to claim your property, you must do so promptly and demonstrably with the bankruptcy trustee. Do not wait: the sooner and more concretely you substantiate your position, the greater the chance that you will actually recover your goods. Record your notification in writing and attach your terms and conditions, quotation, and invoice as supporting evidence.

This is how you reclaim your goods in case of non-payment

Are you encountering a customer who isn't paying? Then it helps to take a structured approach instead of waiting:

1. Put the customer in default and grant a final, reasonable payment term. In doing so, refer to your terms and conditions and the retention of title.
2. Demand your goods in writing and with verifiable proof if payment is not received. Refer to the delivery and the specifications on your invoice.
3. Support with your documentation – quotation, invoice, delivery note, labels, and possibly images. The more concrete, the stronger your position.
4. In the event of impending bankruptcy: act quickly. Notify the (prospective) bankruptcy trustee of your retention of title immediately, before goods are sold or become untraceable.
5. If no solution is found, start a debt collection process and have your position legally substantiated.

A clause regarding proof never stands alone

Important: including only a proof clause does not offer you full protection. Such a clause is always read in conjunction with the rest of your general terms and conditions and the actual course of events. A few things that further strengthen your legal position:

• Labels or stickers – agree that the customer may not remove the labels you have applied before full payment. This makes identification easier.
• Specific quotations and invoices – state as accurately as possible which product has been delivered, so that it remains clear on what the retention of title rests.
• Extended or expanded retention of title – have it investigated whether a broader variant suits your situation, so that the retention also applies as long as there are still outstanding invoices.
• A watertight collection process – respond quickly to payment arrears so you can intervene in time before products become untraceable or mixed up.

Without that coherence, a retention of title remains vulnerable – and then you are left with nothing. Many of these provisions belong in your terms and conditions and touch upon broader corporate law; it pays to have them drafted in conjunction.

Step-by-step plan: how to better protect yourself against non-payment

1. Include a clear retention of title clause in your general terms and conditions.
2. Supplement this with a proof clause to shift the burden of proof in the event of merger.
3. Specify products as accurately as possible on the quotation and invoice.
4. Link agreements regarding labels and tags.
5. Consider an extended or comprehensive retention of title if you supply frequently or if products are resold.
6. Ensure that your terms and conditions are declared applicable before or at the conclusion of the agreement and are provided to the customer.
7. Take swift action with a debt collection process.

Frequently Asked Questions

What is the difference between a retention of title clause and a evidentiary clause?

A retention of title clause stipulates that you remain the owner until the customer pays. A proof clause regulates something different: who must prove that a product belongs to you. They complement each other – the proof clause makes the retention of title more enforceable if products have become mixed.

What is improper commingling?

Improper commingling occurs when your delivered products are stored together with identical products from other suppliers, making it impossible to determine which item belongs to whom. The products are still recognizable as a type, but can no longer be assigned individually – and this complicates invoking your retention of title.

Does a retention of title also apply in the event of my client's bankruptcy?

In principle, yes: you remain the owner until payment. However, a bankruptcy trustee often takes a critical stance, especially regarding commingling. A well-formulated burden of proof clause and accurate record-keeping increase the chances of reclaiming your products. The outcome depends on the specific circumstances.

Is a evidentiary clause always valid?

Not without further ado. In principle, parties may agree on the burden of proof, but the judge can set aside a clause if it proves unreasonable. Stricter rules apply to consumers than in a business relationship. Correct wording, tailored to your target audience, is therefore crucial.

Do I need to notify the customer separately of my retention of title?

The retention of title clause is typically included in your general terms and conditions. However, those conditions must be properly declared applicable and provided to the customer in a timely manner; otherwise, you may not be able to rely on them. Therefore, ensure this is legally structured correctly.

Can I draft a evidentiary clause myself?

That is possible, but it requires careful attention. A proof clause only works if it is correctly formulated and aligns with the rest of your terms and conditions. Therefore, do not opt ​​for copy-and-paste work, but leave the drafting to a lawyer.

Does a retention of title also apply if the customer has already resold the product?

As soon as a purchaser has bought the product in good faith and received delivery, you can usually no longer invoke your retention of title against it. For that situation, you try to maintain your security with an extended retention of title, for example on the claim your customer has against their purchaser. Whether that holds up depends heavily on the wording and the circumstances.

Have your general terms and conditions drafted or reviewed

Do you want to protect yourself to the maximum extent against non-payment and limit the consequences of bankruptcy? Then good general terms and conditions with a watertight retention of title clause and a proof clause are indispensable. At MKB Juristen, we draft your terms and conditions or review your existing set, at transparent rates.

Are you already dealing with a defaulter? Then also take a look at our debt collection. Schedule a free introductory meeting and we will explain how we can help you further.