Romalpa and Subsequent Cases by a Great Deal of Confusion Essay

Romalpa and Subsequent Cases by a Great Deal of Confusion - Essay Example For this reason, the UK Parliament decided to pass the new Sale of Goods Act in 1979 after the process of undergoing a series of amendments2. The past and current cases related to the sale of goods are most decided based on the specific rules and guidelines that are stipulated under the general contract law. Under s 16 of the Sale of Goods Act 1979, it was clearly stated that â€Å"where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained†3, 4. Even though the Sale of Goods Act has been widely used in the development of modern commercial contracts, some sections of the said Act does not contain adequate information when it comes to dealing with cases related to the contracts of sale of goods. For example, each time a seller sells goods or raw materials to a manufacturer (buyer), the seller has the right to request for a protection over the risks wherein the buyer would be facin g the risks of insolvency. Often times, this can be done when the seller reserves the right for the title of goods until such time that the ordered goods have been fully paid by the buyer. Even though s 24 of the Sale of Goods Act clearly stated that the seller can reserve their rights for the title of goods until such time that they receive the right payment (based on their agreed price and quantity), this section does not clearly explain the full purpose of the seller. With regards to the issue on termination and rejection rights of the sellers, the Sale of Goods Act 1979 presented only one (1) section with regards to the specific terms applicable when terminating the agreement5, 6. It is obvious that one (1) section under the Sale of Goods Act 1979 is not enough to present a detailed information with regards to the procedural requirements behind the termination rights of the seller. Lastly, even though the Sale of Goods Act 1979 clearly acknowledges the rights of unpaid seller ov er the traded goods7, 8, several studies explained that the use of the said Act alone is not sufficient in terms of deciding for all commercial cases9, 10. To address the gap with regards to the obligations of both the buyers and the sellers, the Romalpa clause a.k.a. â€Å"title retention clause† was purposely created11. The Romalpa clause is unique in the sense that the said clause contains a long list of elements that the Sale of Goods Act failed to consider. Derived from the case of Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd12, 13, 14, the main purpose of the Romalpa clause is to protect the sellers from cases wherein the buyers would file a bankruptcy15, 16. As a common knowledge, the act of selling goods on credit entails the risks of being unpaid at the time when the buyer would end-up filing bankruptcy17. Due to the limitations of the Sale of Goods Act in 1979.