Breach, Damages and Retention

The buyer can reject goods for defective delivery, breach of an implied or express
condition, or serious breach of an innominate term, unless they have accepted the
goods or, in some situations, where there is only a minor breach. Rejection does
not necessarily constitute a rescission of the contract and it may be possible for the
seller to cure a defective delivery. Wrongful rejection may be treated by the seller as
repudiation of the contract.
The buyer may be able to withhold payment of the price where the seller fails to deliver or to bring an action for damages for non-delivery or if the goods are defective (this may be in substitution of, or in addition to, the right to reject). In rare circumstances, the court may grant specific performance.
The seller can bring actions against the buyer for the price where the property has passed
and the buyer has wrongfully failed to pay, or for damages where the buyer wrongfully
fails to accept and pay for the goods. The seller may also have rights in relation to the
goods: the unpaid seller’s lien permits the seller to retain possession of the goods until
payment; the right of stoppage allows the unpaid seller to stop goods in transit where
the buyer has become insolvent; and the seller may be able to exercise the right of resale.
The seller can bring actions against the buyer for the price where the property has passed
and the buyer has wrongfully failed to pay, or for damages where the buyer wrongfully
fails to accept and pay for the goods. The seller may also have rights in relation to the
goods: the unpaid seller’s lien permits the seller to retain possession of the goods until
payment; the right of stoppage allows the unpaid seller to stop goods in transit where
the buyer has become insolvent, and the seller may be able to exercise the right of resale.
Where goods are sold on credit, the seller may seek to guard against the insolvency
of the buyer by a retention of title clause. A retention of title (ROT) arrangement allows one party (the seller) to retain title to delivered goods until another party (the buyer) has paid for them in full or, where permitted to do so, sold them on to a third party. A clause providing for a retention of title arrangement (ROT clause) can sometimes be referred to as a 'Romalpa' clause, after the case Aluminium Industrie Vaassen v Romalpa Aluminium [1976] 2 All ER 552. Its purpose is to protect the unpaid seller against the buyer's insolvency, giving it priority over other creditors in respect of the goods concerned. For that reason, it is considered to be a form of quasi-security.
The aim of this is to prevent the property from passing to the buyer until the conditions set out in the clause have been met (payment by the buyer), even though there has been the delivery of the goods to the buyer. The clause may also purport to give the seller a proprietary interest in the proceeds of sale of the goods, and, if the goods are to be mixed with other goods in a manufacturing process, the seller may attempt to extend the clause to the manufactured product and the proceeds of the sale of that product. The further these clauses seek to extend the rights of the seller over things other than the original goods, the less chance there is of them succeeding. Where the buyer has acquired the property in the goods, the
the proprietary interest created by the clause will constitute a charge over the goods or
proceeds of the sale, which will require registration. The other difficulty is that someone
purchasing from a buyer, who is in possession of the goods, may acquire title in spite
of the retention of title clause in the original sale contract.