Romalpa clause

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A clause included in a contract of sale in which the seller retains the title of the goods sold until they have been paid for. This is of importance to accountants as it may affect the ownership of stocks; it is essential to determine whether the commercial substance of a transaction rests ownership of an asset in the purchaser, irrespective of any legal agreement. This clause derives its name from the case of Aluminium Industrie Vasseen BV v Romalpa Aluminium Ltd (1976), which was concerned with the practice of selling goods subject to reservation of title.

Subjects: Accounting.

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