A recent case highlights the importance of formalising commercial contracts and strictly managing credit and delivery arrangements.

In Crossmark Asia v Retail Adventures [2013] NSWSC 55 the NSW Supreme Court granted an application by Crossmark for a declaration that it owned and is entitled to sell a consignment of 2,400 electric convection ovens and a consignment of 110,000 electric pedestal fans made by it in China for RAPL following RAPL’s repudiation of the agreement.

The dispute centered on the terms of sale and whether the retention of title clause applied.

After the agreement was made (and some goods had been shipped) a dispute arose because of late payment. The seller cancelled the contract. The buyer subsequently became insolvent.

The Court decided that the contract was contained in the written agreement and not subsequent purchase orders (which the buyer had argued were a contract variation).

As the buyer had not yet obtained possession the retention of title clause was valid and the seller had the right to sell the goods, even though they carried the buyer’s brand.

As the buyer had not obtained possession the relevant provisions of the Personal Property Securities Act (requiring registration of the seller’s interest) did not apply.