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Contracts - Romalpa Clauses

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A Romalpa Clause in a contract provides that until payment is received, title or ownership of goods sold remain with the seller.

In this way, risk of loss and damage pass to the buyer upon delivery, but the title passes to the buyer upon payment in full. 

In other words, he must pay in full in order to get title.


The use of "reservation of title" clauses (or, as they are commonly referred to, "Romalpa clauses") has become widespread in the sale of goods. Under this type of clause, the seller retains ownership of the goods until full payment has been made, but the buyer is allowed to take delivery of the goods. If the buyer does not pay, the seller can therefore take possession of the goods.


An example of a simple clause would be:

"Property in the good shall not pass to the buyer until the buyer has discharged indebtedness to the seller for the purchase price of the goods."

This is the simplest type of restraint of trade clause and is basically designed to ensure ownership of the good is retained by the vendor until the purchaser has paid the contract price in full. It protects the vendor in the event the buyer fails to pay for the goods at the agreed time, or is unable to pay the contract price in full due to insolvency.


An example of an "all monies" clause is:

"Property in the goods shall not pass to the buyer until the buyer has discharged all outstanding indebtedness to the seller whatsoever."

Basically this type of clause reserves property in goods pending payment by the purchaser to the vendor of all monies owing on any account, regardless of whether monies are owing in relation to the specific goods held by the purchaser.


An example of a complex ROT clause is:

"The ownership of the material to be delivered by the seller will only be transferred to the purchaser when he has met all that is owing to the sellers

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What position does that leave me if I want to legal challenge this. Without causing me excessive expresses.


Netlaw responds: If you say that they cannot properly sue because there was a new agreement for time payment, then you can apply for an injunction saying that the Statutory Demand Notice is wrong. But it will cost you. An injunction should not be done without legal advice. Type up a Statement setting out precisiely all the facts as you know them and see a lawyer as soon as possible. A letter shouid be sent to the other side saying how inappropriate the Demand procedure is when the subsequent agreement between the parties was made and kept by you. But you must get your facts right!"

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