The decision of the High Court in Associated Alloys focuses on enforceability of a Romalpa style clause within the context of the security registration provisions of the Corporations Law. The apparent willingness of the court to uphold such a clause to the possible detriment of creditors with registered interests has been the subject of considerable controversy. Indeed, the weight of Australian and international literature on the subject suggests that such clauses are illegitimate to the extent that they compromise creditors’ interests, since they represent a device resulting in unfair surprise and inject significant uncertainty into commercial dealings. This analysis argues that such clauses have a legitimate place in the Australian legal constellation, but that the approach taken by future courts to interpreting and enforcing such clauses needs to be more commercially informed and flexible than was the case in Associated Alloys, where evidentiary rather than conceptual problems ultimately defeated the device.
|Number of pages||12|
|Journal||Australian business law review|
|Publication status||Published - 2002|