ABSTRACT
The general effect of a sale subject to a reservation of title clause under Portuguese law is that the buyer accepts all the risks that are normally those of the owner of the goods whilst the seller enjoys a quasi security interest in the goods. Should the buyer fail to make his payments, the seller may stipulate a reasonable period of time by which all moneys owed by the buyer have to be paid and that a failure in this respect will constitute a breach of contract. In this circumstance the seller may choose one of two means to protect his position, either the enforced execution of the contract or its rescission. In the first case the seller will seek a court order demanding payment whereas in the case of rescission the seller will notify the buyer of his decision to rescind the contract whereby the buyer is compelled to return the goods to the seller and the seller is required to return any payments the buyer may have made. The seller who opts for rescission is entitled to be compensated for any loss or damages he may have further suffered arising out of the decreased value of the sale, for example, the cost of carriage and packaging. Further in the case of rescission the seller may stipulate a liquidated damages clause although in the case of instalment sale agreements Portuguese legislation sets a ceiling as to the amount that the seller may claim.
