Advise Goldcorp Ltd Essay Example | Topics and Well Written Essays - 1250 words

Advise Goldcorp Ltd - Essay Example The RoT clause is an agreement that allows the seller of goods to hold ownership/retain title, of the goods until the occurrence of a specified/agreed event; that event being either the payment of supplied goods, or payment of all money owed1. By agreeing to the RoT clause the buyer of the product agrees that until payment of the purchased goods is made the company that is selling the goods holds ownership claim to the goods, and hence can exert that claim anytime it wants. This allows the selling company to protect its investment. During the insolvency proceedings, a RoT ensures return of owed money which otherwise is highly unlikely under the circumstances2. Goldcorp Ltd. has been in regular business with GT Jewelers. Both entered into doing business with each other by signing an agreement that also included a RoT clause, of which both parties were aware. After the GT Jewelers failed to remit payment for the months of September and October while Delivery had been made, Gold Corp Lt d. enforced a RoT to the GT Jewelers. Under the RoT, Gold Corp Ltd have claimed the ownership of: 1 kilo of gold in their vault, stamped with Goldcorp Ltd’s seals, A tank containing 2 kilos of melted gold bullion, 150 gold and diamond engagement rings worth ?5,000 each, and ?25,000 representing proceeds of sale of gold by GT Jewellers Ltd to another jewellery manufacturer. Gold Corp cannot rely heavily and positively on their RoT to claim their goods/money. The absence of certain clauses makes Gold Corp an unsecured creditor thus making the chances of receiving owed payment meak. The Rot fulfills the first most condition of being a valid contract since it was agreed upon by both parties before the business. There are scenarios which can either render the RoT ineffective or simply lead to its termination, the RoT does not consist of any clause signifying the conditions under which the RoT will be void or terminated, thus the RoT holds valid between the two companies3. Gold Cor p Ltd has demanded 1 Kilo of gold, stamped with Gold Corp seal. The company can claim the gold under the clause (i-a) of the RoT. This is a separate goods storage clause which states that until full payment has been received by Gold Corp for all gold supplied to GT Jewellers by Gold Corp Ltd. to GT Jewellers and at whatever time: property in the goods shall remain in the Company and such goods must be marked as belonging to the company and stored separately. This clause allows the Gold Corp Ltd. to reclaim 1 Kilo of gold as they are still unsold and in the possession of the buyer, who under the RoT was obligated to store the goods separately from goods of other parties and in an identifiable position4 till payment had been made by GT Jewelers. Although since the RoT did not consists of an extended clause of ‘allowing the seller to have the right to access the premises of the buyer in order to determine whether the obligation is being complied with’5, there is no assuret y that GT Jewelers actually complied with having stored the unsold good in an identifiable position. Gold Corp Ltd. has ascertained that they claim ownership of ‘a tank containing 2 kilos of melted gold bullion’. Under i-b of the RoT, which states that, if GT Jewellers converted the supplied gold into any new product either by including some other product in the mixture and in whatever proportions such conversion will be considered under the rights of Gold Corp and beneficially and legally ownership will reside in Gold Corp, Gold Corp has legal rights to claim the 2 kilos of melted