ABSTRACT
The terms of a traditional hire purchase or conditional sale agreement would normally prohibit the hirer/buyer reselling the goods before paying for them. In Romalpa however, the contract expressly anticipated that the goods would be used in a manufacturing process and the products be sold before payment. The willingness of the court to apply equitable principles in Romalpa was perhaps all the more surprising in view of the received attitude to another equitable security device in commercial transactions. The commercial purpose of all title retention devices, including conditional sale and hire purchase, is to secure the credit supplier of goods against the risk of the buyer's failure to pay. Romalpa caused consternation to receivers and other insolvency practitioners who saw the possibility of the pool of assets available for satisfaction of the claims of secured creditors being depleted by extensive retention of title claims. Twenty-five years of case law on retention of title clauses, a number of issues remain unresolved.
