Did you know that oftentimes, for something that you’ve constructed for a client, you may give over ownership of the title way sooner than you expected and hold onto the risk way longer than expected?
To find out everything you need to know about risk and title transfer, watch this video or continue with this quick read.
A lot of times in contracts this clause is a bit of a sly fox so you need to be on the lookout for it.
What is Risk?
- Whose responsibility is it to look after the output of your work?
- Once risk transfers, that is when you will be responsible for anything that happens… mainly damage/theft/etc.
- Whose responsibility is it to look after the risk?
What is Title?
- Title describes who the legal owner of the goods/services/output of work/etc. is
- When the title transfers from the supplier to you, it means you are now the legal owner of the output
This whole clause from a commercial point of view is about when risk and title transfer, and to whom.
So What’s the Problem?
- Risk Transfers a certain amount of time after delivery
So you’ve delivered your scope of work but for whatever reason the client wants you to retain the risk.
- Title Transfer on Delivery
This means that they own what you’ve produced for them before they’ve even paid for it.
What Do We Do About It?
- Risk to Transfer once you Deliver
- Title to Transfer upon Full Payment
This is FAIR.
For more contractual advice, Quantum Contract Solutions is here to guide and assist you through everything contract related. Let’s reduce risk in your contracts and save time and money, just click this link to get our FREE case study to show you how clients just like you are doing it.