Skip links

Romalpa Clauses

Are named after the decision in the Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd case which upheld the validity of a retention of title clause in contracts for the sale or supply of goods. Romalpa clauses are now commonly used by business as a form of protection against a customer becoming insolvent after taking delivery of goods, but prior to having paid for them.
Usually when a product is sold, the purchaser becomes the owner at the point at which they are taken. By including a Romalpa clause in a contract, the product taken by a customer remains the property of the business until the customer pays the full price.
This means that a seller of goods should then have priority over mortgages, charges and debenture registered against a buyer’s assets. If the full price is not paid by the due date, the product may be taken back by the business. The business can then sell the product to another customer. A customer who does not return the goods can be sued for the amount that is not paid. The customercan also be prosecuted by the police for a criminal offence.