In the present case, the parties have included a Romalpa Clause in their contract thereby reserving the title of the goods with the seller. According to this clause, the title of the goods rest with the seller until final payment is made by the buyer. This clause has been specifically created and is used in business contracts to protect the rights of the seller in cases where the buyer fails to pay for the goods delivered. This clause is applicable even when the seller has delivered the goods to the buyer. In other words though the buyer has possession of the goods, the ownership still rests with the seller.
This clause is useful in cases where the payment is made through instalments and where the buyer becomes insolvent. There are certain terms and conditions that are needed to be fulfilled in order to succeed in a case using the Romalpa clause. Primarily, the terms of business of any party should include the right to recover the goods by entering into the buyer’s property and it should also put a duty on the buyer to store the goods separately so that it can be claimed. There has been a lot of discussion as to whether the Romalpa Clause is compatible or can be applied to cases by the Convention.
In the case of Roder Zelt-Und Hallenkonstruktionen GMBh v. Rosedown Park Pty Ltd. And Reginald R Eustace, the Federal Court of Australia held that the Romalpa Clause was indeed compatible with the provisions of the Convention. In this case, a German seller had sold some tents and other accessories to an Australian buyer and had agreed that the payment would be in instalments. The buyer after paying a few instalments went into financial difficulties and became insolvent. The seller sued the buyer for breach of contract and wrongful detention of the goods as the title of the goods remained with him due to the Romalpa Clause.
The buyer disputed the presence of the clause and claimed ownership of the goods. The Court held that the Convention was applicable to the present situation and the Court applying the relevant provisions held that the parties had included the clause and hence the propriety in the goods would pass to the buyer only on payment of the full price. The Court further held that there is a breach of contract as the buyer by filing of insolvency has declared his inability to perform his part of the contract and hence has caused considerable damage to the seller and hence is liable for fundamental breach of contract.
Applying these facts to the case at hand, we can see that there are many similarities between the cited case law and the present case, the facts of both being the same. As such, the principle laid down by the Court in the Roder case (supra) can be said to be applicable to this case also. In other words, the proposal made by Dean the Administrator cannot be accepted as the ownership of the goods still remain with Bildia with Digit having only possession of the goods. In this case, just like the other, the buyer has filed for financial difficulties and has an Administrator appointed.
Secondly, the buyer had agreed to pay in instalments and is yet to pay the complete price Thirdly the Convention is applicable to the present case and as per the provisions of the Convention with special regard to Article 25, fundamental breach of contract, there has been a breach of contract from the buyer and hence the seller can seek legal remedy for the damages caused. Further, the presence of the Romalpa clause indicates that the goods are still his property and hence can be claimed by him and not used by the buyer as part of his assets.