What is a retention of title clause and how it helps to secure your payments in France?

Retention of Title Clause in France- Complete and operational guide to secure your sales, protect your cash flow, and accelerate debt recovery (including in insolvency proceedings)

When an invoice remains unpaid, many suppliers discover a brutal reality: delivering a good often means losing the main lever of pressure. The customer now holds the merchandise, uses it, sometimes resells it, and the creditor ends up pursuing payment… with evidence, deadlines, and sometimes an insolvency that appears at the worst moment (safeguard, judicial reorganisation, liquidation).

French law nevertheless offers a formidably effective tool when the sale concerns identifiable goods: the retention of title clause. Properly drafted, properly “placed” (at the right time) and supported by a rigorous process, it can transform a classic unpaid invoice into a direct recovery strategy: you no longer claim only money, you reclaim your asset (or, failing that, the resale price still due).

But this tool is also one of the most misused: clause put in the wrong place (late invoice), “invisible” clause (small print), absence of proof of acceptance, insufficient identification of the goods, missed reclamation deadline, incomplete inventory, resale or transformation… Result: the clause exists “on paper”, but becomes inoperative when it is most needed.

This guide explains to you, in a practical and actionable way:

• what retention of title really is (and what it is not);
• in which contracts and on which goods it works;
• how to draft it and have it accepted without weakening your evidence;
• how to make it “recoverable” (identification, documents, process);
• how to act if your customer enters insolvency proceedings (deadline, letter, supervisory judge);
• what to do if the customer has resold, transformed, incorporated the good, or if a third party (landlord, bank, carrier) blocks the restitution;
• how to handle deposits and avoid unpleasant valuation surprises;
• and finally, how to articulate retention of title with an overall strategy (T&Cs, penalty clause, interest, evidence).

Target audience: French and foreign companies (US, Australia, New Zealand, UK, EU, UAE, India, China…) selling to partners in France or delivering goods intended to be held in France, as well as any supplier wishing to secure its T&Cs and strengthen its debt recovery capacity.

1. Understanding retention of title: logic and real benefit

1.1 Simple definition

The retention of title clause is a stipulation by which the seller retains ownership of the sold good until full payment of the price (principal and, depending on the wording, interest). In short: the customer can receive and possess the merchandise, but does not become its owner as long as they have not paid.

It is a security that is extremely useful in debt recovery because it allows, under certain conditions, to move out of the logic “I pursue a debtor” and into a logic “I recover my asset”.

1.2 What retention of title changes concretely

Without retention of title, an unpaid invoice often puts you into an unfavourable equation:

• you must demonstrate the existence of the claim;
• bring proceedings to obtain an enforceable title;
• then enforce (seizures), with delays and a risk of insolvency.

With an effective retention of title, the priority sometimes becomes restitution:

• you recover the good (or its value / or the resale price still due);
• which reduces exposure and accelerates the economic outcome;

especially if the customer enters insolvency proceedings: retention of title can allow you to escape (partially) the logic of an unsecured creditor swallowed up in the crowd.

1.3 What retention of title does not do

It does not replace an evidentiary file: you need documents, evidence, traceability.

It does not work magically if the good has been transformed, incorporated, resold (even if alternatives exist).

It does not eliminate priority conflicts with certain third parties (landlord, pledgee, carrier), but it greatly improves your position.

2. In which contracts can a retention of title clause be inserted?

2.1 The sale of goods: the most frequent case

This is the natural ground: you sell goods (equipment, components, stock) and you want to secure your payment. This is particularly relevant when:

• unit amounts are high (machines, equipment);
• the customer is new or fragile;
• payment terms are long;
• your merchandise is stored at the customer’s premises and identifiable.

2.2 “Hybrid” contracts: attention to the “in kind” criterion

Retention of title can appear in contracts other than a pure sale (works contract, manufacturing, printing, software supply depending on the contractual structure, etc.). The key point: the good must be able to be found “in kind”.

If the object is intended to be incorporated into a building or transformed irreversibly, retention of title loses its main strength (restitution). In those cases, you must think about alternative securities (pledge, guarantees, advance payment, retention money, etc.).

2.3 International contracts: foreign seller, French customer

For a supplier located outside France, the question is not “can I include a retention of title?” but rather:

• will the good be held in France?
• are the applicable law and the competent court consistent with enforcement in France?
• is your documentation (T&Cs, purchase orders, deliveries, serial numbers) compatible with evidence in French litigation?

In practice, when the stock and the insolvency materialise in France, you need a strategy that “holds” in front of French actors (administrator, insolvency practitioner, supervisory judge, enforcement officer).

3. On which goods does retention of title work?

3.1 Tangible goods: the simplest case

Equipment, tools, machines, stock, components, merchandise: retention of title is particularly effective as soon as one can:

• individualise the thing (serial number, reference, batch, barcode);
• and locate it (warehouse, production site, worksite, vehicle).

3.2 Intangible goods: possible but more technical

Retention of title can target intangible goods (certain rights, software depending on structure, etc.), but the logic of “reclamation in kind” becomes complicated. In those cases, the issue is often less the “physical” restitution than the control of an exploitation right or the transfer onto the price.

In practice, for the “fast recovery” objective, tangible goods remain the field where retention of title is the most “profitable” operationally.

4. The decisive point: the clause must be agreed at the right time

4.1 The principle: agreement at the latest at delivery

The classic Achilles’ heel: the clause exists in your documents, but it was not accepted in time. Yet, a retention of title must be agreed between the parties in a writing established at the latest at the moment of delivery (in practice: at the latest at the moment when delivery occurs, including by consent when there is already physical possession).

4.2 Why the invoice alone is often insufficient

In many companies, the clause is printed on the back of invoices. Problem: the invoice often arrives after delivery. You then risk having a “late” clause: it does not protect when the customer enters insolvency proceedings.

4.3 The robust solution: a signed contractual document

To drastically reduce the risk of challenge:

• include the retention of title on the front of the purchase order or the contract;
• make it visible (readable characters, clear mention);
• obtain proof of acceptance (signature, “approved”, traceable electronic acceptance).

5. How to draft a clause that “holds”: structure and options

An effective retention of title clause is more than a one-liner saying “the seller remains the owner.” If you ever need to rely on it, you want the clause to work in the real world, with real documents and real problems. That means it should clearly cover a few practical points: what exactly is being sold, what exactly must be paid, how you prove it, and what happens if the goods disappear, are resold, or only partly paid.

5.1 The minimum core that should always be there

At a minimum, the clause should say three things in plain terms:

• Ownership stays with the seller until full payment.

• “Full payment” means the full price (and, if you choose, interest as well).

• The clause applies only to the goods clearly identified on the relevant document (order, delivery note, invoice, etc.).

5.2 A key add-on: who bears the risk (loss/theft)

If you do not address risk, you can end up in an argument when something goes wrong before payment. The question becomes simple but painful: if the goods are stolen, damaged, or destroyed while they are at the customer’s premises, who takes the hit?

Many sellers solve this by adding a clear rule: risk transfers when the goods are physically handed over, even though ownership is retained. In practice, this is often paired with an obligation for the buyer to insure the goods. The goal is to avoid a situation where the buyer says, “You were still the owner, so I don’t owe anything,” after a loss that the buyer could have prevented or insured.

5.3 If the customer resells or transforms the goods: be realistic and organised

A strict ban on resale or transformation looks strong on paper, but it can be unrealistic in sectors like distribution or trading. A more workable approach is often:

• allow resale (sometimes as a tolerance), and

• secure the seller’s position by setting a clear mechanism (for example, immediate payment of the remaining balance upon resale, payment into escrow, or another agreed security).

Be careful with wording here. Some phrases can weaken you instead of protecting you. For example, saying “the retention extends to transformed products” can backfire if it highlights that the goods will no longer be identifiable in practice.

5.4 Deposits: say clearly what happens if you reclaim the goods

Deposits are often where disputes explode. If you want to keep a deposit as compensation (or as a fee for use of the goods), you must say so clearly in the contract. If you say nothing, you may be forced to return part of it depending on the situation.

The practical rule is simple: do not leave deposits in a grey area. Decide your approach and write it down in a straightforward sentence.

6. The key issue: identification of the goods

6.1 Practical rule: a retention of title without identification is a “theoretical” retention

To reclaim, you must be able to demonstrate that the goods present at the customer’s premises are those that you sold and that are unpaid. This requires:

• a precise designation (item, model, quantity, batch, reference);
• ideally a serial number / unique code;
• and total consistency between: purchase order → delivery note → invoice → inventory.

6.2 Operational best practices

Use a single reference framework (SKU, internal number) and print it everywhere.

Photograph or scan serial labels for unit goods.

In case of delivery to a worksite or on site, obtain a acceptance report indicating references and location.

For batches, link the batch to a shipping document (CMR, delivery note) + batch code.

6.3 Fungible goods: a more flexible regime (but not without risks)

Certain interchangeable goods (fuels, certain standardised products) can be reclaimed more easily when a stock of the same nature and quality is present. But caution: as soon as there are several suppliers, conflicts of reclamation can arise, and the administrator may have to allocate pro rata.

7. Repeated business relations: must the clause be repeated at each sale?

7.1 Yes… unless you have a signed framework

If you have a framework agreement or T&Cs accepted “once and for all” in a strong evidentiary document (signature, electronic acceptance), you can avoid re-signing for each order. But you must be able to prove:

• the existence of a course of dealing;
• knowledge and acceptance of the clause at the time of deliveries.

7.2 Beware “battle of general terms” (T&Cs vs purchasing terms)

A customer may oppose purchasing general terms excluding retention of title. In French law, in case of discrepancy, incompatible clauses can be neutralised, according to the applicable rules. Concretely: if your retention of title is only in your T&Cs and the customer imposed contrary purchasing terms, you can lose your security.

Prevention measures:

• require express acceptance of your T&Cs;
• provide a clause indicating that your T&Cs prevail, and that any derogation must be in writing;
• avoid processes where the customer’s order “imposes” its purchasing terms without a formalised response.

8. Customer in insolvency proceedings: retention of title becomes a decisive tool

When a customer goes into safeguard, judicial reorganisation or judicial liquidation, the priority changes: unsecured creditors are often “diluted”. Retention of title is then one of the rare mechanisms allowing recovery of significant value — provided you act fast and correctly.

8.1 Basic condition: the good must exist “in kind” on the opening date

You can reclaim if the good is found in kind in the debtor’s estate at the time of opening of the proceedings (even if it is not physically in its premises, for example held elsewhere on its behalf).

If the good is transformed, sold, or has become inseparable, the reclamation of the good may fail — but a reclamation of the price may remain in certain cases.

8.2 The mandatory deadline: 3 months (do not miss it)

The deadline is, in practice, the most costly mistake: the reclamation must be exercised within the legal deadline from publication of the opening judgment (often in the BODACC). This deadline is strict: missing it means losing the concrete benefit of retention of title.

Process reflex:

• systematically monitor signals (delays, rumours, changes in behaviour);
• set up a BODACC watch for large accounts;
• trigger immediately the internal “reclamation” procedure.

8.3 The procedure: registered letter with acknowledgement to the right interlocutor

Ask your insolvency lawyer to prepare and send the letter:

• In safeguard/reorganisation: to the judicial administrator (if there is one);
• In liquidation: to the liquidator.

The request must made by registered letter with acknowledgement of receipt, with exhibits: contract/order, accepted T&Cs, delivery notes, invoices, proofs of identification.

8.4 And if the administrator refuses (or does not reply)?

If no response or refusal within the provided period, you must refer the supervisory judge within the legal deadline. Here again, the deadline is short and the forfeiture is severe.

8.5 Inventory: why your case can be decided on a document you do not control

The inventory is supposed to list the assets and the securities. If it is incomplete, summary, unusable or absent, the burden of proof can shift, but in practice:

if the inventory does not mention your good, you will often have to prove that it existed in kind on the opening date;

hence the importance of robust identification and material indications (photos, serials, reports, location).

9. Customer in a situation of over-indebtedness: beware the competent judge

When the customer is an individual in an over-indebtedness procedure, certain restitution requests linked to retention of title can run into jurisdiction issues. In practice, this requires framing the procedural strategy: not confusing appeal routes, and adapting the action according to the applicable regime.

10. The fate of deposits: sensitive point and often poorly anticipated

10.1 The economic rule: compare the value of the recovered good and the remaining debt

When you recover the good, it is often necessary to compare:

• the current value of the recovered good;
• and the amount of the secured debt still due.
• If the value of the recovered good exceeds the remaining debt, you may have to return the excess.
• Simple example:

Invoiced price: 2,000 €

Deposit received: 1,000 €

Unpaid balance: 1,000 €

Current value of the recovered good: 1,500 €
In this scheme, you cannot “add up” value + deposit as if the good were still worth 2,000 €. There may be an adjustment.

10.2 How to secure: clause on keeping deposits (with moderation)

If you want to be able to keep all or part of the deposits (consideration for use, compensation), you must write it. But beware: keeping a deposit that is too punitive can be challenged (especially if it looks like a manifestly excessive penalty).

Good approach:

• justify keeping it as consideration for use / immobilisation / costs;
• avoid disproportionate amounts;
• articulate with a separate penalty clause if necessary (but keeping overall coherence).

11. Frequent obstacles and solutions: resale, transport, landlord, bank, theft, confiscation

11.1 Resale: you do not recover the good from the sub-buyer… but you can target the price

In case of resale, reclamation “in kind” from the sub-buyer is in principle very difficult. However, the law may allow a transfer of the ownership right onto the price still due (if the price has not been paid/offset according to the legal conditions).

Operational consequence: your objective becomes to identify:

• to whom the customer resold;
• what price remains due;
• where the payment circulates (factoring, Dailly assignment, set-off).
• And you must act within deadlines and via the appropriate procedure (administrator/liquidator then, if needed, supervisory judge).

11.2 Factoring and assignments of receivables: the payment can “go” elsewhere

When the customer assigned its receivables (factor, bank), the price may be received by a third party. Depending on circumstances and dates, your transfer onto the price can run into priorities and payments already made.

Practical rule: the earlier you act, the higher your chances of “capturing” a price not yet paid.

11.3 Unpaid carrier: right of retention

If the merchandise is with an unpaid carrier, the carrier can assert a right of retention and block restitution. This becomes a tug-of-war between two creditors: the one with the retention of title and the one who physically holds the good.

Strategy: document the chronology, check whether the carrier knew of the existence of the retention, and adapt the procedure by involving the right actors (and avoiding letting the practitioner “run down the clock”).

11.4 Landlord of the premises: potentially superior privilege

The landlord of premises may benefit from a privilege over the furniture furnishing the premises, including those belonging to third parties, except in certain cases (knowledge of origin, circumstances). In practice, this is a serious risk when the unpaid customer stores your goods in premises for which it no longer pays rent.

Prevention:

• identify where the stock is held (customer site, third-party warehouse, deposit);
• obtain contractual information if storage is critical;
• act fast from the first unpaid invoices (before the landlord takes control).

11.5 Pledge-holding bank / security interest: competition of securities

If a bank holds a pledge or a security interest prior over a stock, it can enter into direct competition with your retention of title. The priority date and the structure of the security can be unfavourable to you.

Prevention:

• request information on existing securities (if possible);
• prefer upstream securing (partial payment, guarantees, exposure limits);
• and, for certain goods, consider publicity or a different structuring.

11.6 Theft, destruction, confiscation: who bears the loss?

By default, if you remain owner, you can theoretically bear the loss if the good disappears. Hence the importance of the transfer of risks clause and insurance.

Special case: criminal confiscation of the good at the buyer’s premises. The owner may, depending on the case, seek restitution or value, but the strategy depends on the context and must be carried out very rigorously.

12. Publication of the contract: useful or gimmick?

There are publicity mechanisms allowing, in certain cases, to facilitate restitution by dispensing with having to “recognise” the ownership right. But to be useful, the publicity must be done before the opening of the insolvency proceedings. In the reality of SMEs, this is not systematic, but it can be relevant for:

• costly equipment;
• recurrent relationships;
• sectors where insolvency is frequent.

13. Conclusion: retention of title is a recovery tool, not a standard sentence

The retention of title clause is one of the best “insurances” for the supplier… but only if it is:

• accepted at the right time (at the latest at delivery);
• proven (signed document / traceable acceptance);
• workable (identifiable goods, traceability, coherent documents);
• integrated into a process (monitoring, deadlines, letters, supervisory judge);
• and articulated with an overall strategy (penalties, interest, evidence, jurisdiction).

For foreign companies selling into France, it is often a major lever: it can avoid ending up as a simple creditor in French insolvency proceedings, without priority and with an uncertain recovery horizon.