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Retention of Title Clause in UK Contracts: What It Means & Example Wording

A retention of title (ROT) clause — sometimes called a Romalpa clause after the landmark case Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] — provides that ownership (legal title) of goods supplied does not pass to the buyer until the buyer has paid for them in full. The seller retains the right to recover the goods if the buyer fails to pay or becomes insolvent. This is a critical protection for suppliers selling goods on credit terms.

Last updated: February 2025

When to Include a Retention of Title Clause

  • In every contract for the sale of goods on credit terms, particularly where the buyer could become insolvent before paying
  • In manufacturing supply agreements where raw materials or components are supplied for incorporation into finished products
  • In distribution and wholesale agreements where goods are supplied for resale

Example Wording

Legal and beneficial title to the Goods shall not pass to the Buyer until the Seller has received in full (in cleared funds) all sums due to it in respect of the Goods and all other sums due from the Buyer on any account. Until title passes, the Buyer shall: (a) hold the Goods as bailee for the Seller; (b) store the Goods separately from its own goods and those of third parties, clearly identified as the Seller's property; (c) maintain the Goods in satisfactory condition and keep them insured for their full value; and (d) not remove or obscure any identifying marks on the Goods. The Seller may at any time require the Buyer to deliver up the Goods and, if the Buyer fails to do so, enter any premises where the Goods are stored to repossess them. Note: This is illustrative wording only and should be tailored by a qualified legal professional.

This example wording is illustrative only. Customise it to your specific circumstances and consider seeking legal advice.

Is a Retention of Title Clause Enforceable in the UK?

Simple retention of title clauses (where title is retained until the specific goods are paid for) are generally enforceable in the UK. However, 'all monies' clauses (where title is retained until all debts owed by the buyer are paid) are also commonly upheld. Extended clauses that attempt to claim title over products manufactured from the supplied goods, or proceeds of sale, are more difficult to enforce and may be treated as unregistered charges under the Companies Act 2006, rendering them void against a liquidator or other creditors.

Common Mistakes

  • Failing to require the buyer to store the goods separately and identifiably — if the goods are mixed with others, the seller may be unable to identify and recover them
  • Including extended ROT provisions (claiming ownership of manufactured products or sale proceeds) without understanding that these may be void as unregistered charges
  • Not including a right of entry to recover goods — without this, the seller has no practical means of repossessing the goods from the buyer's premises

FAQ

What is a Romalpa clause?

A Romalpa clause is another name for a retention of title clause, named after the 1976 case Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd, in which the Court of Appeal upheld a clause reserving title to goods until the buyer had paid. The case established that retention of title clauses are effective in English law.

Does a retention of title clause need to be registered at Companies House?

A simple retention of title clause does not need to be registered because it is not a charge — the seller is merely reserving existing title. However, extended clauses that claim rights over the proceeds of sale or manufactured products may create a charge that requires registration under the Companies Act 2006. Failure to register renders the charge void against a liquidator.

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This is guidance for UK businesses, not legal advice. Example wording is illustrative. Consult a solicitor for complex matters.

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