As a consumer, when was the last time you read
the Terms of Trade on the back of an order form
or when you bought online? And turning that
around, as a business owner, how familiar are
you with your own Terms of Trade for the goods
or services you sell? When was the last time you
Both buyers and sellers can often plead guilty to not taking much
notice of the Terms of Trade, but when you’re the seller of goods or
services, it’s important to protect your interests and eliminate the
ambiguity that becomes the source of legal disputes down the line.
The first step is a written Terms of Trade that protects your right to
be paid in full for the goods or services you offer.
They should be written in clear, plain English and will normally be no
longer than a single A4 page (such as on the other side of an order
form). If you’re selling online, you should have the Terms of Trade
published clearly on your website.
While there are many standard clauses that should be included in
your Terms of Trade, here we focus on your right to ownership of
goods until full payment and the enforcement of that right.
Think about your ownership rights
Retaining ownership in goods after the purchaser has taken
possession will help secure payment. This type of clause is
commonly referred to as a ‘reservation of title’ or a Romalpa clause.
They need to be explained to the consumer to be enforceable under
the Consumer Guarantees Act and this can be as simple as requiring
a signature on your order forms. Customers should always be given a
copy of the Terms of Trade they have agreed to.
The same applies for online sales. Electronic order forms on
websites should contain a link to your Terms of Trade along with a
notice stating that the purchaser agrees to be bound to them by
completing the order online. A copy of the Terms of Trade should
be emailed to the buyer as an attachment to the order confirmation
Personal Property Securities Register
If you need to reclaim goods from the purchaser’s premises, a
retention of title clause, by itself, does not give you the right to take
them back. Ideally, your Terms of Trade should outline rights to
register a notice on the Personal Property Securities Register (PPSR),
which is a good idea for large transactions. The PPSR is a simple
public register which allows companies to publicly notify an interest
over certain property and it’s best done prior to the buyer taking
possession so that you secure your priority over other creditors. This
is the key to securing additional rights to goods no longer in your
possession, including the right to repossess them if the purchaser
defaults (with some exceptions). To register a notice on the PPSR you
can go to www.ppsr.govt.nz
So be prepared and make sure you have robust Terms of Trade
before you need them. Speak to a solicitor if you’d like some
guidance and be sure to put it on your short-term ‘to do’ list.
For more information contact;
Solicitor at Pitt & Moore