Retention of title clause
Contract Law

A retention of title clause in a contract displaces the usual rule of law that title (i.e. ownership) to goods passes to the purchaser at the time the parties intend. For specific goods, ownership passes when the contract is made however this may be rebutted. 

Due to the nature of sale of goods contracts, in the event of non-payment, the vendor must sue for payment. If the purchaser is insolvent, the seller of the goods is left without the remedy of damages (which would be equal to the value of the goods plus interest).

It is this situation that retention of title clauses in contracts address - title to goods is stated to transfer to the the purchaser only upon payment in full for the goods. In this way, the interest of a liquidator or administrative receiver does not defeat the title has has been retained by the seller of the goods - the consequence is that the seller of the goods can get the goods back from the purchaser prior to payment.

Such retention of title clauses may extend to products manufactured with the goods supplied and onward sales by the initial purchaser.

Sometimes these clauses are referred to as "Romalpa" clauses, as the first decision dealing with them is named Aluminium Industrie Vaasen B.V. v Romalpa Aluminium Limited [1976] 1 WLR 676.