• Korea Trade Review
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• v.42 no.2
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• pp.391-410
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• 2017

This study examines Romalpa clause as an extended or enlarged retention of title clause under SGA. Under a simple retention of title clause, the seller retains title to goods supplied until the goods have been paid. A simple retention of title gives the seller super-priority interest in other creditors of the buyer without registering a charge. Aluminium Industrie Vaassen BV v. Romalpa Aluminium Ltd introduced the concept of 'extended reservation of title(so called 'Romalpa clause') in English law. It is because the Court of Appeal held that under an extended reservation about title clause the seller can trace his title into money which constitutes the proceed of sale by the buyer of goods supplied by the seller. However, since Romalpa case, the courts are reluctant to uphold the seller's extended title. Under Romalpa clause, the seller attempts to extend his protection by laying claims to new products manufactured from his goods or to proceeds of sale by the buyer. Where the seller's goods are lawfully used by the buyer to create new goods, the property in the new goods will generally vest in the buyer. It is because there has been discomfort if the seller gains the windfall profit of the new goods. Moreover, regarding tracing proceeds of sale by the buyer, the courts held that the seller must establish fiduciary relationship with the buyer. If the fiduciary requirement cannot be established, the extended retention of title clause is seen as a charge over the proceeds, and void if not registered. For these reasons, it is difficult that the claims based on the extended retention of title clause would be upheld.