(a) Is it usual in this economy for suppliers of goods or services to supply those goods or services to corporations on credit?

It is common for suppliers of goods in Hong Kong to sell goods on credit. Such a practice is less common for the supply of services. However, in times of economic downturn, suppliers of services are often required, in effect, to supply their services on credit.

 

(b) If so, what would be the average credit period of time?

The average time for payment would depend on the industry involved. Estimates range from a period of 30 to 60 days to a period of 90 to 120 days (for trading companies), up to as long as 180 days when Letters of Credit are involved.

 

(c) Is it possible and/or usual in this economy for a supplier to require security over property of the corporation for the supply of goods or services?

It would be usual to require security over property for the supply of goods in the form of 'retention of title' (or 'Romalpa' clauses), but it would not be usual to require security for the supply of services.

 

(d) If so, is the form of supply known as 'retention of title' practised and recognised in this economy and is it enforced?

Yes, 'retention of title' clauses are commonly used. A true retention-of-title clause may be enforced without seeking the assistance of the court. For more complete protection, creditors at times also require the borrower to grant the supplier a charge; thus, if part of the retention of title clause is found to be unenforceable, the creditor can fall back on the charge (assuming it has been registered).

Where a bank has appointed a receiver to take control of a company's property, it is not unusual for disputes to arise as to the scope and/or effectiveness of the of a supplier's retention of title clause. In such circumstances, the supplier will often grant the receiver permission to sell the goods in dispute, subject to an agreement to deposit agreeing to deposit the proceeds in an escrow account, to be distributed later pending resolution of the dispute.