Common use of Passing of Property Clause in Contracts

Passing of Property. 1. Notwithstanding delivery, the property in the Product shall remain vested in Seller until Buyer has paid in full the price for such Product and all other Product sold and delivered by Seller to Buyer. 2. In the period in which the property in the Product remains vested in Seller, Buyer holds the Product as bailee for Seller. During such a period Buyer shall keep the Product separate from any other Product in its possession and insured against all risks to their full replacement value at Buyer's expense. During such period Buyer shall have the right to use or sell the Product. 3. The rights to use and sell the Product granted to Buyer in Clause VI.2 may be terminated on written notice by Seller in the event of payment of any invoice becoming overdue and it shall automatically terminate without need of any notice in the event that a proceeding for suspension of payments, controlled administration, insolvency, bankruptcy, liquidation, winding-up, (or the equivalent under any jurisdiction) is initiated by or against Buyer, or Buyer enters into an arrangement with its creditors for its debts. Upon termination of such rights: (a) all sums owed by Buyer to Seller shall become immediately due and payable; (b) Seller shall be entitled to retake possession of the Product and/or to resell the Product, and for any such purposes it may enter Buyer's premises or seek an order by a competent authority to this effect. 4. In the event that the Product are processed or otherwise mixed with, or affixed to other Product to form a new product or other articles, upon manufacture of such new product or article the property therein shall be vested in Seller pro-rata, on the basis of the value of the Product over the value of such new product or article, and in respect of each such new product or article the provisions of Clauses VI.2 and VI.3 shall apply mutatis mutandis. 5. If the retention of title and the security stipulated in this Clause VI is not valid or only valid to a limited extent according to the applicable law, the rights of Seller under this Clause VI shall be valid and enforceable to the maximum extent possible under the applicable law.