HLJ_41-2_1.pdf 1020 KB
The relation between preferential right and title retention clause in Sale of Goods
Many people understand title retention clause as the division of ownership but don't consider relations with preferential rights (civil code art.303, 321).
Preferential right is a right in personam having priority, not a right in rem. When a buyer does not pay the price in full, the seller can use a preferential right to the whole sold goods.
When they agree title retention clause, the seller has the payment claim that is not paid in full and beforehand the buyer can use and transfer an sold goods like an owner. From this point, it's possible to understand that sold goods with title retention clause is "the thing of the debtor" which is necessary for the establishment of the preferential rights. Furthermore, title retention clause is agreement to reinforce a preferential right. Therefore, the preferential rights is acceptable even if title retention clause is agreed.