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Romalpa Clause: A Comprehensive Guide to Retention of Title in Sales
Definition & Meaning
A Romalpa clause is a provision in a sales contract that allows a seller to retain ownership of goods until the buyer has fully paid for them. This means that while the buyer can take delivery of the goods, the seller maintains legal title until payment obligations are met. If the buyer fails to pay, the seller has the right to reclaim the goods. This clause is often referred to as a retention of title clause or reservation of title clause and is more commonly used in Europe than in North America.
Table of content
Legal Use & context
Romalpa clauses are primarily used in commercial transactions involving the sale of goods. They are relevant in various legal contexts, particularly in contract law and bankruptcy law. If a buyer becomes insolvent or bankrupt, the seller can utilize the Romalpa clause to recover goods that have not yet been paid for. Users can manage their contracts effectively with the help of legal templates available through services like US Legal Forms, which provide ready-to-use documents drafted by attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A furniture manufacturer sells a batch of chairs to a retailer under a Romalpa clause. The retailer takes delivery but has not yet paid. If the retailer goes bankrupt, the manufacturer can reclaim the chairs.
Example 2: A supplier sells electronic equipment to a business with a Romalpa clause. The business uses the equipment but fails to pay. The supplier can take back the equipment if payment is not made (hypothetical example).
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Romalpa clauses are enforceable but may require specific language to ensure clarity.
New York
Commonly used in commercial contracts, but must comply with UCC provisions.
Texas
Enforceable, but the seller must take steps to protect their interest in the goods.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Retention of Title Clause
Similar to Romalpa clause, it allows sellers to retain ownership until payment.
Often used interchangeably with Romalpa clause.
Security Interest
A legal claim on collateral that secures a loan or obligation.
Security interests can apply to various assets, not just goods sold.
Lease Agreement
A contract where one party pays for the use of an asset owned by another.
Ownership remains with the lessor, while Romalpa involves sales contracts.
Common misunderstandings
What to do if this term applies to you
If you are a seller considering a Romalpa clause, ensure it is clearly stated in your sales contract. If you are a buyer, be aware of your obligations under such a clause. If you find yourself in a situation where a Romalpa clause applies, consider consulting with a legal professional to understand your rights and responsibilities. Additionally, explore US Legal Forms for templates that can help you draft or review contracts effectively.
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