Across Australia, many suppliers are still operating on outdated credit application forms, loosely worded terms and a quiet hope that their customers will simply pay. Some rely on basic guarantees or ‘pay when paid’ clauses and leave the rest to chance.
A recent Federal Court decision should make every supplier stop and consider: If things went wrong tomorrow, would my terms and conditions actually hold up?
The decision in Ramoo v Grow Trade Finance Pty Ltd [2026] FCA 286 (Ramoo) illustrates exactly what is at stake. A company director who personally guaranteed a trade finance facility and charged her personal property against it found that the strength of the documentation was everything. Clear wording and proper PPSR registration made all the difference. The judgment stands as a timely reminder for anyone extending trade credit in Australia.
You might be thinking this does not really apply to your business, or perhaps wondering whether protections like Retention of Title clauses, personal guarantees, charging clauses and PPSR registrations are even available to ordinary suppliers?
The short answer is yes you can use these protections, and you really should. This Federal Court decision is not restricted to banks or specialist finance providers. It applies directly to trade credit suppliers right across Australia and makes clear why taking the time to review and strengthen your credit application forms as well as your terms and conditions is one of the smartest moves you can make.
Unpacking the case
Medoc Pty Ltd, a timber wholesaler, entered into a Trade Finance Facility Agreement with Grow Trade Finance. The director, Ms Ramoo, signed the agreement in two capacities — once as director of the company and once personally as guarantor.
The agreement contained a clear charging clause (clause 19.1(e)) that charged all of the director’s present and after-acquired property with performance of her obligations as guarantor. Grow Trade registered its security interests on the PPSR and lodged a caveat over her real property.
When Medoc defaulted on repayments, Grow Trade appointed receivers over the company’s assets and over Ms Ramoo’s personal assets as well. Ms Ramoo took the matter to the Federal Court, arguing that the receivers had no right to enforce against her personal property. She lost on every point.
Justice Charlesworth ruled that:
- The guarantee and charging clause clearly extended to the director’s personal assets.
- The security was immediately enforceable under the PPSA, no extra court order or formal demand was needed once payments stopped.
- Even the later increase in the facility limit was binding on the director, based on her conduct.
The court supported the finance provider because the paperwork was clear, the signatures were made in the right capacity, and the registrations had been handled properly. As a result, enforcement could move ahead quickly and without massive cost.
Why this matters to trade credit suppliers
Some suppliers assume that personal guarantees and PPSR security are only for finance companies. That is simply not true.
These same legal tools are standard and highly effective for any business supplying goods or services on credit. Australian courts regularly enforce director personal guarantees, charging clauses and properly registered PPSR interests in trade credit situations.
Here is why the principles from the Ramoo case apply directly to your business:
1. Director personal guarantees work for trade suppliers
If your customer collapses or stops paying, a properly worded personal guarantee allows you to pursue the director’s personal assets. These guarantees are already common in trade credit, but what Ramoo demonstrates is how far they can reach when drafted correctly. In that case, the director’s personal assets were squarely on the line.
A guarantee is only as useful as the assets behind it. A quick land title search can confirm whether the director actually owns property worth pursuing.
2. Charging clauses
A well-drafted clause in your standard credit application or terms and conditions can create a charge over the director’s property. The Court in Ramoo confirmed that one clear clause is sufficient to make the security immediately enforceable under the PPSA.
3. ROT + PPSR is perfect for goods suppliers
For trade credit suppliers, your retention of Title clause is your first line of defence. It makes clear that you retain ownership of the goods until payment is received in full. When you register that interest on the PPSR, along with any broader security, you can repossess unpaid and unfixed stock even if the customer enters insolvency.
Pair this with a director guarantee and charging clause and you’ve got solid “belt and braces” protection for any unpaid balance. The reasoning in Ramoo confirms that courts will give effect to the parties’ contractual allocation of risk where the documentation is clear.
4. The enforcement advantages are the same
The real advantage becomes apparent when things go wrong. Properly documented security allows you to move quickly, take decisive action and avoid drawn-out litigation. Poorly worded or unregistered security, by contrast, can leave you ranked as an unsecured creditor at the back of the queue.
The key takeaway: Review your credit application forms regularly
The Ramoo judgment is a timely reminder that your trade credit documentation should be treated as a vital protection tool.
Bellrock recommend suppliers include the following suite of protections:
- Explicit director guarantees, signed in the correct capacity.
- Robust charging clauses over personal property.
- Strong, up-to-date ROT wording.
- Clear authority for immediate PPSR registration.
- Provisions that cover future increases in credit limits.
The details matter. Ambiguous wording or missing signatures create gaps that directors or liquidators will readily exploit. Regular reviews, ideally every one to two years or following significant court decisions, help close those gaps and keep your documentation court-ready.
When everything is in order i.e there is clear wording, correct signing and timely PPSR registration, the courts will support you. Enforcement becomes faster, more cost-effective and considerably more straightforward.
Let us put your paperwork to the test
Bellrock’s Trade Credit team can work with you to move beyond assumptions. We review your current credit applications and terms and conditions, identify where your documentation may fall short and update it based on real-world outcomes from cases like Ramoo.
The objective is straightforward: to give you stronger protection if a customer defaults and put you in a far better position if you ever need to enforce your rights by ensuring you have the right guarantees, retention of title clauses, charging provisions and PPSR authorisations in place.
