Businesses often extend credit or provide goods subject to later payment. The risk that the recipient of credit is insolvent is not always apparent, but it is an important risk to consider.
The law of insolvency is clear, if the recipient goes into a liquidation, usually such creditors are unsecured creditors and, the provider will receive little or no return for their monies or goods.
Businesses have often tried to secure their payment by way of contractual provisions purporting to retain an interest in property, whether monies or other. These contractual provisions have met with varied success.
This 3-hour seminar will provide an introduction to attempts to preserve interests in property advanced to insolvent persons.
The seminar will draw a distinction between the main methods of preserving interests in equity and at common law. The predominant equitable mechanism is by way of a trust which arises over monies provided for a purpose, known as the Quistclose trust. The common law mechanism is the retention of title or Romalpa clause.
The seminar will consider how Quistclose trust and Romalpa clauses were developed in equity and at law, when they may be recognized and enforced, and the problems and issues associated with both. The seminar will also consider the theoretical justification for Quistclose trusts and Romalpa clauses and how this justification may explain the differing success of the two.
