Topic > Importance of Title Clauses - 2444

The ruling in the Romalpa case now serves merely as a romantic notion of what a title reservation clause might be. In reality, such clauses are now a much more scrutinized and difficult prospect for the unpaid seller seeking compensation. Critical Discussion The concept of a retention of title clause (hereinafter referred to as ROT) can be traced back to the late 19th century in the case of McEntire v Crossley1. But its best-known origins lie in the case of AIV v Romalpa2, so much so that ROT clauses are often known as "Romalpa clauses". Incorporating an ROT clause into a contract for the sale of goods allows the seller to retain ownership of the purchased goods until a condition is satisfied by the buyer, usually payment of the price. These clauses come into force through sections 17 and 19 of the Sale of Goods Act 19793. Section 17 provides that ownership will only pass when the parties so intend, while section 18 gives the seller the right of disposal until all conditions they will not be satisfied. was satisfied. The intention behind retention of title clauses is to assure the seller that payment will eventually be made and, if not, the seller will be able to reclaim their goods. The underlying importance of this is that, in the event of a buyer becoming insolvent, an effective ROT clause will allow the seller priority over any other creditors. At first glance, one can see that an ROT clause is a positive mechanism. It gives the seller a sense of security that if he doesn't get paid for the goods, at least he will get it back. However, the clause has been limited and interpreted narrowly enough to call into question whether an ROT clause is now a more difficult prospect for the unpaid seller seeking compensation. A... middle of the sheet... (article 9-312, paragraph 5, letter a)). Therefore the first creditor to file the petition has the first right to the assets and accounts.” As long as everyone with an interest in the buyer and his assets does their part, it seems that their interests will be represented and balanced with each other. Monti suggested that "judges should be made aware of the importance of RTCs in trade and should be made to see the approach of other countries". The UCC is just one example of how a security system works, other jurisdictions have been involved to highlight that truly effective reform will involve combining the most positive aspects of each system. Unlike other aspects of the law, trading is a fast-paced environment and change needs to happen early to ensure clarity and focus. Without it, trade will be blocked, the economy will falter, and seller protection will continue to be neglected.