Are there any Practical Solution to circumvent the “Romalpa Clause” conundrum ?

A few days ago after my weekly posting Week No:11A, a reader asked — “Are there any Practical Solutions to circumvent the “Romalpa Clause” Connundrum. ?” Is it possible to draft contractual provisions to go around it ?

Yes, it is possible to carry out some risk mitigation amendments for Construction Contracts. The amendments could be used to reduce the typical issues and risks facing the Employer concerning the risk of paying for unfixed materials and goods on site.

To protect the Employer’s rights and interest with regard to the unfixed materials and goods and as an added protection to minimize the losses that could be incurred by reason of termination or abandonment of the contract, contract drafters should consider the possibility of adding the following amendments to any standard form of contract that has provisions for payment of unfixed materials and goods on site.

To control the issues relating to unfixed materials and goods, a two prong approach could be considered for implementation.

  1. An Agreement between the Contractor and all his suppliers of materials and goods and such agreement to be appended as an Appendix to the Contract documents. The Agreement is to state clearly that the supplier have waived and/or “contract out” all his rights of retention of title he has at law and to whatever materials and goods that are or will be delivered to site.
  2. The provision for payment of unfixed materials and goods should be amended to require the contractor to provide written/documentary proof of payment for the said unfixed materials and goods to the supplier within 14 days before the certification of the next interim payment.

Failure to do so within the time prescribed, the provision should be drafted in such a manner that the payment certifier would be empowered to deduct the sum paid from the next interim payment certificate when due.

The rationale behind the above moves is to ensure that the title of unfixed materials and goods has indeed been transferred to the contractor before the next interim payment certificate.

For those of you who found my weekly musings informative and helpful, I have posted 45+ posts at www.medium.com. You can access them there. You can use this link to find me at :-

https://lhchin.medium.com.

Hope to see you guys signing up as my followers.

For those of you who found my weekly musings informative and helpful, I have posted 58+ posts at www.medium.com. You can access them there. You can use this link to find me at :-

https://lhchin.medium.com.

Hope to see you guys signing up as my followers.

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Cheers, Happy Reading and Wishing you Good Health Always.