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Difference between revisions of "Conditional Sales Contracts and Security Agreements (11:VI)"
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Conditional Sales Contracts and Security Agreements (11:VI) (view source)
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{{REVIEWED LSLAP | date= August | {{REVIEWED LSLAP | date= August 1, 2023}} | ||
{{LSLAP Manual TOC|expanded = consumer}} | {{LSLAP Manual TOC|expanded = consumer}} | ||
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A party with a security interest in consumer goods may avoid the “seize or sue” restriction where: | A party with a security interest in consumer goods may avoid the “seize or sue” restriction where: | ||
:(a) The debtor (borrower) is a company, a partnership of corporations, or a joint venture of corporations (s 55(4)(a)); | |||
:(b) The debtor has engaged in wilful or reckless acts or neglect which have caused substantial damage or deterioration to the goods, and the secured party may seek a court order pursuant to s 67(9) disqualifying the debtor from the rights and remedies ordinarily available under ss 67(1) – (7); or | |||
ss 67(1) – (7); or | :(c) The secured party discovers after seizure that an accession that was collateral has been removed and not replaced by other goods of equivalent value and free from prior security interests; a claim may be advanced against the debtor for the value of the accession (s 67(8)). | ||
:'''NOTE:''' Accession means goods that are installed in or affixed to other goods. For example, a shovel attached to a truck. See ss 38 and 1(1) for more information about accessions. | :'''NOTE:''' Accession means goods that are installed in or affixed to other goods. For example, a shovel attached to a truck. See ss 38 and 1(1) for more information about accessions. | ||
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Security is perfected when the requirements under the ''PPSA'' are met and has attached, meaning that the collateral has come into existence (i.e. if security has not attached, then there is no collateral). Under s 12, a security interest attaches when: | Security is perfected when the requirements under the ''PPSA'' are met and has attached, meaning that the collateral has come into existence (i.e. if security has not attached, then there is no collateral). Under s 12, a security interest attaches when: | ||
:(a) Value is given; | |||
:(b) The debtor has rights in the collateral; and | |||
:(c) There is an enforceable security interest (see s 10 for writing requirements for security agreements) unless the parties specifically agree to postpone the time of attachment, in which case the security interest attaches at that specified date. | |||
Generally, once security is perfected, the creditor’s interest has priority over the interests of third parties, whereas unperfected security takes a lower priority (s 19). However, as described above, one exception to s 19 is in s 30 where a creditor’s interest in the collateral does not continue because of a ''bona fide'' purchaser’s interest, but the creditor’s interest will continue in the proceeds. | Generally, once security is perfected, the creditor’s interest has priority over the interests of third parties, whereas unperfected security takes a lower priority (s 19). However, as described above, one exception to s 19 is in s 30 where a creditor’s interest in the collateral does not continue because of a ''bona fide'' purchaser’s interest, but the creditor’s interest will continue in the proceeds. | ||
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