Credit Management: Reservation of Title Clause

Published by slang March 23rd, 2006 in Credit Management

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Understanding the infamous “Romalpa case” will further assist us to tighten our terms and conditions. If we recalled, the Romalpa case relates to the reservation of title clause.

It either states:
Clause 1: Ownership to the goods does not pass until the goods are paid for, or

Clause 2: Ownership to the goods does not pass until all monies due to the supplier have been paid.

For Clause 1, it is essential that the goods supplied can be separately identified. Hence, it will be necessary specifically to identify goods with unpaid invoices. This usually means some form of batch or serial number on the goods which matches with the same number on the invoice.

If Clause 2 above is used, any identifiable goods may be reclaimable.

Always consult your solicitor on the suitability of using this Romalpa case in relation to the nature of your company business.

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