Retention of Title Clause

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According to S.17 of SOGA 1979, if the parties do not intend the property to pass, it will not do so, even if the buyer obtains possession, the court would give effect to the parties’ intention as in Tank and Vessels Industries Ltd v Devon Cider Co Ltd. Such a clause is contemplated by s.19 of SOGA 1979, where seller can ‘reserve the right of disposal’ in relation to the goods. The purpose of the ROT, is to provide the seller with some degree of security against the insolvency of the buyers, it is a good ‘device’, however today, there is a change of law render this ‘device’ difficult to achieve its objective because of the common law interference. Body The leading case to open the issues of ROT is Aluminium Industrie BV v Romalpa Aluminium, made and sold aluminum foil to Romalpa. 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 which mean a fiduciary. The court held that the ROT was valid, that means AIV was elevated to a preferential creditor, with priority of settlement of debts, an advantage which would not have been available but for the retention of title clause. This decision enable a seller to claim unused goods and the proceeds of sale, also, the buyer would become a fiduciary of the seller, if the buyer is a fiduciary of the seller, the ownership would remain on the seller, buyer merely an agent who would not obtain ownership of the property and so seller can reserve the ownership until the buyer pay in full. But, would it be absurd for the buyer be a fiduciary of the seller and had to act in good faith to the seller? In reality, the parties are merely engaged in a sale. Also, would it be unfair for the seller to be a preferential creditor, just jumping in the queue and directly take the

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