Holding on to a customer’s goods for late payment

Andy, I hadn’t read your message when I posted mine, but as far as I know

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write advising them that you intend to sell the goods in lieu of payment of your outstanding bill and all incurred storage charges. Give them 7 days to pay up and reclaim the goods and sell them immediately if no reply.
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would be the correct procedure if you DID have such a clause in your agreement. You’d have no grounds to do so unless specifically agreed.

Under Common Law you have an automatic lien against goods that are the exact subject of your charges. If you’ve not been paid for storing a pallet you have a lien against that pallet until you’re paid. That gives you the right to retain the goods, not to sell them. The right to sell or dispose of the goods has to be established in contract.

Also, unless established in contract, the lien would only be against goods that were specifically the subject of the overdue charges. You can’t hold this week’s consignment against last week’s charges unless your contract (Terms & Conditions) specifically allow it.

Which just goes to show how important it is to have proper Terms & Conditions.

Posted under Late Payment, Legal Issues

Posted by Alec at 8:05 am, October 4, 2006

1 Comment so far

  1. Alec added on  October 4th, 2006 at 08:30

    Firstly, unless there is a contract in place to the contrary (for example if your pre-advised Terms & Conditions give you the right), you do NOT, under any circumstances, have the right to sell your customer’s property. To do so would be theft.

    Even if your properly worded T & Cs allow you that right (under a general lien) it would only apply to goods which were covered by the contract you have with your customer, i.e. connected with the services you supplied your customer with: You might sell a pallet of goods that you’ve not been paid the storage charge for, but you couldn’t sell a forklift that they’d lent you.

    Secondly, if the company is in receivership your only correct course of action would be to inform the receiver of the debt due and of the fact that you’re in possession of your customer’s property. You could also ask them to remove the property and inform them of your storage charges if they fail to do so.

    If you wait until the company’s wound up and then sell the ‘asset’ it would still be theft.

    I’m not a lawyer of course…..

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