Retention of Title in Italy

Yes. Under Italian law, retention of title (riserva della proprietà, hereinafter RoT) is governed primarily by Articles 1523 to 1526 of the Italian Civil Code. According to Article 1523, in instalment sales (vendita a rate), the seller retains ownership of the goods until full payment of the price, while the buyer assumes the risk upon delivery.

In other words, the buyer acquires possession and use of the goods upon delivery but does not become the owner until the final instalment is paid. Conversely, the seller remains the legal owner until full payment is received, but does not have material control over the goods.

Although the rule refers specifically to instalment payments, the Italian Supreme Court (Italian Supreme Court, 22 March 2006, no. 6322) has clarified that a retention of title clause may also be validly included in a contract of sale providing for full or partial deferred payment, even if the price is not paid in instalments.

In both cases, the defining element is that delivery takes place immediately, while transfer of ownership is deferred until the price is paid in full. This interpretation has also recently been confirmed in the context of finance leases (leasing traslativo), by the Italian Supreme Court, 27 April 2024, no. 20669.

Including a RoT clause only in a framework agreement is not sufficient if the goods are not explicitly identified: such clauses would not be enforceable against the creditors of the buyer or the receiver. In such cases, Italian courts require explicit consent in the single sale contracts that are subsequently entered (Italian Supreme Court, 7275/2005: 14891/2002; 4976/1994, 11960/1990).

The system, governed by the rules of the Italian Civil Code, is generally considered rather formalistic.

Between the parties, no formality is required for the validity of the clause regarding the sale of movable goods — even an oral agreement is valid, as confirmed by the Italian Supreme Court (Italian Supreme Court, Section I, 13 May 1991, no. 5324).

To make RoT enforceable against third parties, additional formalities are necessary:

There must be a written agreement bearing a “date certain” (data certa), which means that the contract has a legally verifiable date, that makes it enforceable and opposable to third parties prior to any enforcement or bankruptcy proceedings (see also point 4). This written document may consist not only of the original document containing the parties’ declarations, but also of a subsequent document drafted for the purpose of acknowledging or confirming the prior agreement. As explained by the Italian Supreme Court, the RoT clause must be evidenced in writing, but the written document does not need to be the original contractual source of the parties’ agreement (Italian Supreme Court, Section I, 13 May 1991, no. 5324).

In addition to being agreed in writing, the retention of title clause must be expressly confirmed in each invoice relating to subsequent supplies. This requirement was introduced by Article 11(3) of Legislative Decree No. 231/2002 (which implements Directive 2000/35/EC on combating late payment in commercial transactions). To this end, each invoice must:

• Refer explicitly to the retention of title clause,
• bear a date certain (prior to any enforcement or bankruptcy proceedings), and
• be recorded in the seller’s accounting books.

In the case of production machines and machine tools, Italian law provides additional rules aimed at extending the enforceability of retention of title clauses against sub-buyers, including those who acted in good faith.

First, according to Article 1524(2) of the Italian Civil Code, when the sale concerns machines with a price exceeding EUR 15.49, the retention of title clause may also be enforced against sub-buyers, including those acting in good faith, when:

• The clause has been registered in a special registry maintained by the court with jurisdiction over the place where the machine is physically located, and
• The machine is still located in that jurisdiction at the time of resale.

Second, under the so-called Legge Sabatini (Law No. 1329/1965, as amended in 2016), the RoT clause (or similar arrangements) could be enforced against good faith sub-buyers when:

• It concerns new production machines or tools with a unit price not below 500,000 Lira (approximately EUR 258.23);
• The machine carries a clearly visible label placed on an essential part, indicating key details: the seller’s or lessor’s name, the type and serial number of the machine, the year of manufacture, and the court where the contract was concluded.

These rules aim to ensure public traceability of the seller’s title, thereby protecting their rights even in cases involving third parties or sub-purchasers.

If the buyer becomes subject to judicial liquidation (liquidazione giudiziale), Article 178 of the Italian Insolvency Code governs the treatment of contracts involving RoTs.

In this context, the receiver (curatore) may choose, with prior authorisation from the creditors’ committee, to assume the contract, provided that the price is still payable, whether in instalments or as a deferred lump sum. However, the seller is entitled to request a guarantee (cauzione) unless the receiver opts for immediate payment of the price, in which case legal interest is deducted.

If the receiver does not continue the contract, the seller is required to return any instalments already collected, without prejudice to the right to equitable compensation for the use of the goods, which may be offset against the refund due.

To enforce the RoT clause in the liquidation proceedings, the seller must demonstrate that:

• The clause was agreed in writing,
• It bears a “date certain” (data certa) prior to the declaration of liquidation, and
• All formal conditions under Article 11(3) of Legislative Decree No. 231/2002 are satisfied, including confirmation in invoices and proper accounting records.

If, prior to liquidation, the goods were resold to a good-faith third party, the seller may lose ownership, unless specific protections apply, such as for machinery duly registered under Article 1524(2) Civil Code or under the Legge Sabatini. In case the customer was in bad faith (i.e. knew that the purchaser was not the legal owner of goods) it will be for the seller’s burden to prove it.

Finally, if the retention of title clause is not recognized — for example, because it cannot be adequately proven or does not meet the required formalities — the seller will not be entitled to reclaim the goods, and may only submit a claim for the unpaid price, ranking pari passu with other unsecured creditors.

This situation is governed by Article 1525 of the Italian Civil Code, which is mandatory and cannot be derogated by contract.

• If the unpaid instalment exceeds one-eighth of the total price, the seller is entitled to terminate the contract and may seek restitution of the goods by initiating summary court proceedings (a ricorso per decreto ingiuntivo). This procedure may allow for relatively quick enforcement, unless the buyer contests it.
• Conversely, if the unpaid instalment does not exceed one-eighth of the total price, the contract cannot be terminated, even if the parties have agreed otherwise. In this case, the buyer retains the benefit of the agreed payment schedule and remains entitled to pay the remaining instalments according to the original terms.