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Disputes over liens can escalate quickly and expensively. Make sure you have followed all the correct procedures, explained here, to ensure you are in the strongest possible position


The BIFA STC lien at clause 8(A) (i) is designed to operate automatically as a general lien on goods and documents as soon as money is due and owing without notification. However, in order to provide clarity, it is advisable to make it plain to a customer that its goods are being held due to the exercise of a lien rather than owing to any other reason such as delay. This should be advised to the client as soon as possible. The question of whether or not monies are due and owing


depends on any payment or credit terms you have with your customer and your intention to rely on clause 21(B) of the 2017 BIFA STC, which provides that if any sum is due and owing then all sums properly earned or invoiced but not yet due and owing will become payable immediately. This is a useful clause if you are concerned about the liquidity of your customer and fear that administration may be imminent. You do not have to rely on this clause and any non-reliance does not mean you cannot rely on it later on.


Dealing with an administrator Written notification of the lien is helpful should your customer enter administration, as a moratorium is immediately imposed once the administrator has been appointed, limiting what actions you can take even with the lien in place. Furthermore, if the date of the administrator’s appointment predates the operation of a lien, it cannot be exercised against the administrator. If you have a written notice of exercise of lien referable to the BIFA STC pre-dating the date of the appointment of the administrator, that is clear evidence to pass to the administrator to show that the lien has been notified as being in operation. If this evidence is not available you will need to prove that


monies are due and owing and that the BIFA terms apply. An administrator in this situation is likely to put you under severe pressure to release the goods to it if you cannot produce the evidence quickly. If you think that you are going to have to exercise a


right of sale in respect of your lien under clause 8(A) (ii), this intention should be included in your written notification to the client at the earliest opportunity. This clause requires you to give 21 days’ written notice of your intention to sell. However, if the goods are perishable or likely to deteriorate, then under clause 8(B) you may sell immediately once sums are due and owing, provided you have taken reasonable steps to notify the customer. You may wish to draft the initial lien notification


10 July 2018


yourself. However, in some circumstances you may benefit from the assistance of a solicitor. For example: • If the goods are branded, • If an administrator or owner of the goods is threatening legal process if you do not release the goods,


• If the goods do not belong to your customer and in breach of clause 3 of the BIFA STC, your customer has not bound the owner of the goods to the BIFA STC. If you do come under pressure from the administrator you should


seek legal advice at the earliest opportunity, as if the lien has not been properly exercised you could be wrongly withholding the goods, which is known as conversion or civil theft. This could lead to a claim against you for damages, particularly if the delay in delivery leads to a breach of a sale agreement that the customer


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