Retention of title

Germany has very comprehensive, supplier-focused regulations on retention of title (ROT), which must be explicitly agreed to prior to delivery. Most importantly, the debtor must acknowledge the ROT clauses before receiving the first invoice.

Most companies include ROT provisions in their general trading conditions.In this case, either the debtor must sign these conditions in advance, or you have to advise the debtor explicitly (e.g. with a note in the order confirmation) that the general trading conditions apply before the first invoice is sent. It’s vital to get proof that the trading conditions have been agreed to. Otherwise, the benefits of the more complex version of German ROT clauses can’t be used to reduce the outstanding amount.

There are three different kinds of ROT:

Basic ROT

The goods supplied remain the legal property of the seller until full payment. The seller can or must get the goods back.

Increased ROT

This is retention of open accounts. In the course of an ongoing business relationship, the supplied goods remain the legal property of the seller until all the outstanding amounts from the open account or business relationship have been fully paid.

Extended ROT

This is assigned to sellers in advance. In accordance with §354a of the Commercial Code, advance assignments are effective despite non-assignment agreements between the buyer and any third party.

(End of chapter 2 - Retention of title)

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