[Direct answer]In the Beijing area, the conclusion is that it is allowed, but it must comply with the agreed upon and statutory conditions. According to Article 641 of the Civil Code of the People's Republic of China, the parties may agree in the sales contract that if the buyer fails to fulfill its obligation to pay the price or other obligations, the ownership of the subject matter shall belong to the seller; Article 642 stipulates that before the transfer of ownership of the subject matter, if the buyer fails to pay the price as agreed and still fails to pay after being reminded within a reasonable period, the seller has the right to take back the subject matter; Article 643 stipulates that the buyer may redeem the subject matter within the reasonable redemption period agreed upon by the parties or specified by the seller. Moreover, according to Article 641, paragraph 2, the ownership retained by the seller shall not be enforceable against bona fide third parties unless it has been registered. Therefore, taking back the subject matter is not an arbitrary disposition. After taking back the subject matter, the seller shall consult with the buyer on the matter of depreciation or other disposal and settle the payment already made. If necessary, the seller may file a lawsuit to assert its rights.

1. Problem background and typical scenarios

In installment payment or credit sales transactions, to reduce the risk of non-payment, the seller often stipulates that it will retain ownership of the subject matter until the full payment is made. Typical situations include: the buyer defaulting on payments for a long time, and the seller claiming to take back the equipment or goods; the buyer having resold or set up a guarantee, and the seller being hindered in taking back the goods; the buyer going bankrupt or being involved in litigation, and the subject matter being sealed up; and disputes arising between the parties over how to settle the paid price. When the Beijing District Court tries such cases, it usually reviews the effectiveness of the ownership retention agreement, whether it is registered in accordance with the law, and the specific circumstances of the buyer's breach of contract, and then determines whether the right to take back the goods can be exercised and the subsequent settlement method.

II. Key points of dispute

First, whether the agreement of retention of title is valid and effective. Second, whether the buyer's breach of contract meets the conditions for reclamation and whether a reminder is necessary. Third, whether the unregistered retention of title can be invoked against bona fide third parties. Fourth, how to handle the situation when the subject matter is resold, pledged, or sealed up. Fifth, the rules for calculating the discounted price after reclamation and settling the payment. Sixth, how to exercise the buyer's right of redemption. Seventh, the relationship between reclamation, contract termination, and the claim for the full payment. These issues determine whether reclamation can be realized.

III. Professional analysis by Henglue Law Firm

Based on Henglu Lawyer's practical experience in handling sales contracts and corporate disputes, such issues should focus on four key points. First, contractual terms: According to Article 641 of the Civil Code of the People's Republic of China, retention of ownership must be based on a contractual agreement. If the agreement is clear and does not violate mandatory legal provisions, it is generally valid. Second, conditions for repossession: According to Article 642, if the buyer fails to pay the purchase price as agreed, fails to pay within a reasonable period after being reminded, or violates other contractual provisions causing damages, the seller has the right to repossess the subject matter. Third, registration and enforcement: According to Article 641, paragraph 2, the reserved ownership cannot be enforced against bona fide third parties without registration. When conflicts arise with the buyer's other creditors or bona fide transferees, the party without registration may be at a disadvantage, so registration should be completed promptly. Fourth, redemption and settlement: According to Article 643, the buyer can redeem the subject matter within a reasonable redemption period; after repossession, the seller can negotiate a discount with the buyer or resell the subject matter and settle the payment. Any excess or shortage should be compensated accordingly. Fifth, right of choice: The seller can also choose not to repossess and demand full payment, or request to terminate the contract. The choice of approach should depend on the condition of the subject matter and the likelihood of recovering payment. Sixth, evidence points: The contract, reminder records, payment receipts, and registration information are the basis for claiming repossession and settlement.

IV. Practical Suggestions and Legal Basis

Practical suggestions: First, sign a written contract to clarify the ownership retention clause and triggering conditions; Second, promptly handle the registration of ownership retention to prevent the risk of bona fide third parties; Third, when the buyer breaches the contract, send a written notice of default and give a reasonable time limit, and keep the evidence of delivery; Fourth, pay attention to the condition of the subject matter, and if necessary, apply for property preservation to prevent it from being resold or seized; Fifth, after retrieving the subject matter, negotiate with the buyer about the discount or other disposal, and complete the settlement of the price; Sixth, weigh the three options of retrieving the subject matter, requesting the full price, and terminating the contract, and choose the most favorable one. For more details, please refer to the services on our platform.Business and contract disputes in enterprises、Creditor's rights and debts, and enforcement、Real estate transactions and construction projects、\nFinancial capital and cross-border transactions involving foreign entitiesAndSpecial servicesLegal basis: Articles 641, 642, and 643 of the Civil Code of the People's Republic of China (all of which came into effect on January 1, 2021). The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

First, the retention of ownership is subject to the contractual agreement, and the provisions should be clear and specific. Second, the recovery must comply with statutory or contractual conditions, and usually a reminder should be given first. Third, the unregistered retention of ownership cannot be invoked against bona fide third parties, and it is necessary to register it in time. Fourth, when the subject matter is resold or sealed up, measures such as preservation should be taken as soon as possible. Fifth, after the recovery, the discounted price and the paid price should be settled, with the surplus being refunded and the shortage being made up. Sixth, the parties may choose the most advantageous option among recovery, requesting the full payment, and terminating the contract. Seventh, for transactions involving large amounts or easily transferable subject matters, it is recommended to improve the contract terms and consult professional opinions before signing the contract.

VI. Frequently Asked Questions

Q1: If the buyer refuses to pay, can the seller directly take back the goods?

It must meet the requirements and be carried out in an appropriate manner. According to Article 642 of the Civil Code of the People's Republic of China, if the buyer fails to make payments as agreed or fails to pay within a reasonable period after being reminded, the seller has the right to take back the goods; however, it is necessary to avoid unauthorized forcible possession that may lead to conflicts. It is recommended to first send a reminder and keep the evidence, and if necessary, take back the goods through litigation with the support of the court.

Q2: The agreement doesn't mention the retention of ownership. Can I still retrieve the item?

Generally, the right of recovery cannot be claimed. The retention of ownership must be based on a contractual agreement. If no such agreement exists, ownership usually transfers after the goods are delivered, and the seller can only claim payment of the price or breach of contract liability. It is recommended to clearly agree on the retention clause before the transaction and register it in time to effectively control the risk of non-payment.

Q3: Is it necessary to register the retention of ownership?

It is recommended to register. According to Article 641 Paragraph 2 of the Civil Code of the People's Republic of China, the seller's retained ownership cannot be invoked against a bona fide third party unless it has been registered. In the event of a conflict of rights with the buyer's other creditors or bona fide transferees, failure to register may be disadvantageous. Therefore, it is advisable to register in a timely manner to enhance the effectiveness of the right of set-off.

Q4: If the goods have been sold by the buyer, can we still recover them?

It is necessary to distinguish the circumstances. If the third party acquires the subject matter in good faith, it is usually difficult to recover the subject matter, but the buyer can claim the price and compensation; if the third party is not in good faith or there is malicious collusion in the transaction, the buyer can claim corresponding rights. It is recommended to fix the transaction evidence in time and apply for preservation to prevent the loss from expanding, and to file a lawsuit if necessary.

Q5: How will the money I've already paid be calculated after retrieving it?

A settlement should be carried out. After the seller retrieves the goods, he/she may negotiate with the buyer for a discounted price, or sell the goods elsewhere and settle the payment. The difference between the paid price and the value of the subject matter shall be refunded or supplemented as appropriate; the buyer may redeem the goods within a reasonable redemption period. The specific provisions shall be subject to the agreement and the law. It is recommended to keep the settlement basis to avoid disputes.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglue Lawyers on specific situations.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence to avoid missing the statutory time limits. →Business and commercial legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.