3.4 Management of Working Capital 43ders unnecessary any intermediate proceedings in the Member State of enforce-
ment prior to recognition and enforcement”.^86
The latter Regulation lays down a standard form of order to be issued by the
court having jurisdiction according to the Brussels I Regulation^87 at the request of
the creditor. That order will then be served on the defendant debtor. The defendant
has the opportunity to oppose the claim. If the defendant opposes the claim, the
proceedings will continue before the court that issued the order as normal civil or
commercial litigation. If the defendant does not oppose the claim, the order be-
comes enforceable.
Consignment of Goods
Some firms use the consignment of goods as a means of reducing their external
funding needs. There are two or three parties to a consignment. A consignment
may be used as a means of financing a purchase by the consignee.
A pure consignment occurs where: goods are supplied by a supplier to a dealer;
the supplier retains title to the goods until the goods are sold or otherwise disposed
of by the dealer, as authorised by the supplier; and the dealer (the consignee) does
not incur any liability to the supplier for the price, unless and until the dealer sells
the goods. The risk that buyers will not be found for the goods is borne by the
supplier rather than the dealer, and the dealer may pay later than in normal direct
sales.^88
A consignment is thus complemented by a retention of title clause. One of the
purposes of the Late Payment Directive is to make contractually valid retention of
title clauses enforceable (for retention of title, see also Volume II).
If a financing party is involved, the consignment will be supported by a master
agreement. Under the master agreement, the financing party authorises the con-
signee (for example, an equipment dealer) to buy goods from a supplier and take
delivery of those goods acting as an agent for the financing party. The purchase
price can then be paid by the financing party either to the supplier directly or indi-
rectly via the dealer. Legal title is acquired directly by the financing party from the
supplier. In the course of its business, the dealer is able to sell the goods to other
purchasers as an agent for the financing party.
If the contract is governed by English law, the dealer can hold the proceeds of the subsale
in trust as an agent and fiduciary for the financing party to the extent of the moneys paid or
advanced.^89
(^86) Article 1(1)(b) of Regulation 1896/2006.
(^87) Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in
civil and commercial matters.
(^88) The Law Commission, Registration of Security Interests, paragraph 6.22.
(^89) Ibid, paragraph 6.23.