Retention of Title Clauses in Australia

Dilan J. Thampapillai, Deakin University

Abstract

In jurisdictions such as Australia and the United Kingdom the Romalpa clause is regarded as a legal invention of great utility with respect of the commercial sale of goods. However, it is less popular in the United States. Moreover, the common law jurisprudence relating to the clause has raised a number of difficult legal issues that have arguably impeded its proper operation. Further, the consideration by the courts of Romalpa matters on a case-by-case basis may well have obscured significant and compelling public policy concerns relating to insolvency. As such, the courts of the common law will now be made to cede their control over the development of Romalpa jurisprudence to an all-encompassing Australia statutory scheme on personal property securities. Moreover, recent changes to the Corporations Act, also impose new conditions on Romalpa clauses. Yet the marketplace still needs these clauses in order to provide a general sense of security to sellers through the prospect of obtaining some payment in the event of the buyer’s insolvency. The law is presently in an interesting position in relation to Romalpa clauses as the common law has established one, somewhat ad hoc, set of rules, and the new Personal Property Securities Act scheme will likely consolidate many of these rules. Whether the Personal Property Securities Act, will resolve all the legal issues, or create new controversies, remains to be seen.