''Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd'' 9761 WLR 676 is a

UK insolvency law United Kingdom insolvency law regulates companies in the United Kingdom which are unable to repay their debts. While UK bankruptcy law concerns the rules for natural persons, the term insolvency is generally used for companies formed under the ...

case, concerning a quasi-

security interest In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property (usually referred to as the ''collateral'') which enables the creditor to have recourse to the property if the debtor defaults in makin ...

in a company's assets and priority of creditors in a company winding up.

Facts

Aluminium Industrie Vaasen BV was a Dutch supplier of

aluminium foil Aluminium foil (or aluminum foil in North American English; often informally called tin foil) is aluminium prepared in thin metal leaves with a thickness less than ; thinner gauges down to are also commonly used. Standard household foil is typ ...

. Romalpa Aluminium Ltd processed it in their factory. In the contract of sale, it said that ownership of the foil would only be transferred to Romalpa when the purchase price had been paid in full and products made from the foil should be kept by the buyers as bailees (the contract referring to the Dutch expression ‘fiduciary owners’) separately from other stock on AIV’s behalf as ‘surety’ for the rest of the price. But it also said Romalpa had the power to sell the manufactured articles in the course of business. When such sales took place, this would be deemed to be as an agent for AIV. Romalpa went insolvent, and the receiver and manager of Romalpa's bank, Hume Corporation Ltd, wanted the aluminium to be caught by its

floating charge A floating charge is a security interest over a fund of changing assets of a company or other legal person. Unlike a fixed charge, which is created over ascertained and definite property, a floating charge is created over property of an ambulato ...

. AlV contended that its contract was effective to retain title to the goods, and so it did not need to share them with other creditors in the liquidation.

Judgment

High Court

Mocatta J held the retention of title clause was effective. Aluminium Industrie Vaasen was still the owner of the aluminium foil, and could trace the price due to them into the proceeds of sale of the finished goods, ahead of Romalpa’s unsecured and secured creditors. He said the following.

Court of Appeal

Roskill LJ, Goff LJ and Megaw LJ upheld the decision, and that Aluminium Industrie Vaassen retained title to the unused aluminium foil.

Influence

In the commercial law of Commonwealth countries including Australia, clauses in contracts of purchase and sale providing that the seller retains title in the goods sold until the seller receives payment in full from the buyer are known as ''Romalpa'' clauses. In Canada and the United States, these contracts are sometimes called

conditional sale A conditional sale is a real estate transaction where the parties have set conditions. A standard real estate transaction usually begins when a prospective purchaser submits an offer to purchase to the vendor of a property. As in a standard offer ...

agreements.

References

, volume= 4, issue= 2, pages= 2{{endash23, doi= , pmc= , pmid= , accessdate= 12 November 2013, archive-url= https://web.archive.org/web/20131112133705/http://www.herts.ac.uk/__data/assets/pdf_file/0007/38671/HLJ_V4I2_Davies.pdf, archive-date= 12 November 2013, url-status= dead * L Sealy and S Worthington, Cases and Materials in Company Law (8th edn OUP 2008) 495-496 English contract case law United Kingdom company case law United Kingdom insolvency case law Court of Appeal (England and Wales) cases 1976 in case law 1976 in British law