Glossary · Legal and regulation
Retention of title
Also called Romalpa clause, Reservation of title
A retention of title clause keeps the supplier as legal owner of delivered goods until the customer pays for them in full.
With a retention of title clause, ownership of goods passes to the buyer only when they are paid for. If the buyer fails to pay or becomes insolvent, the supplier can try to recover its goods rather than queue as an unsecured creditor. In English law, these are often called Romalpa clauses, after a 1976 case.
The clause must be agreed before delivery. The EU Late Payment Directive requires member states to recognise retention of title clauses that were expressly agreed before the goods were delivered.
Its limits are practical: the goods must still exist, be identifiable and not mixed into other products. It doesn’t help service businesses, whose work can’t be repossessed — for them, deposits and progress billing do the protective job.
Example
A furniture maker delivers €18,000 of fitted shelving under a retention of title clause. When the client goes into administration unpaid, the maker reclaims the shelving that is still in the warehouse, identifiable by its serial numbers.