Commercial Law
Commercial Law Personal Property The PPSA introduces a new system for recognising, prioritising and enforcing consensual security interests over personal property. As an important function, It introduced a code for dealing with priority contests between secured creditors with security interests over personal property.
Part 1 : Establishing the PPSA Applies 1. Personal Property - Property other than land (s10) Personal property includes many different kinds of tangible and intangible property, other than real property. Examples include motor vehicles, household goods, business inventory, intellectual property and company shares. Personal property is known as collateral if it is (or is anticipated to be) the subject of a security interest. s3
2. What is Security? Creating a right to a piece of property as well as to the person – at common law: a)
Non possessory – mortgage
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Charge – instrument; “I hereby charge all of my property to you bank”
i) ii)
Fixed charge: chairs in room; not going anywhere. If always own Macbook that too Floating charge – if what you owned unknown floated above the assets of the party who granted interest. When you defaulted they crystallized above whatever you own. Charge floats over property. When you default fixed over whatever you have then
b) Possessory security interests i) ii)
Lien – (No right of sale) - an instrument that entitles a party to retain possession of encumbered property until to debt has been paid - Lawyers do work and keep all their files – if they don’t pay, keep. have to go to another lawyer who will charge for it all again. Exercise lien over a file. Pledge - Right of sale – Using a pledge to take security operates through use of a bailment whereby the pledgor leaves property with the pledgee” Walk in with valuable watch to pawn shop – give you $50 for watch worth $200. After a month go back charge you $60 for it They already have possession if you don’t pay – just keep it
Personal Property Securities Act 1. 2.
3.
4. 5.
Is it personal property? Is there a security interest? a) Is it excluded in s8? b) What is a security interest? S 12 i) Statute Defintion ii) Case Law Is it a Deemed Security Interests? a) s 12(3) b) PPS Lease S13 Has it attached? S19 Is it enforceable? a) Written agreement s20 b) Enforceability against 3rd parties
6.
Is it perfected? I) Temporary Perfection II) Registration Particulars By Serial Number Description by Proceeds III) Possession IV) Control
7.
Other Issues i) Continuous Perfection ii) Pre-Perfection
8. Default Rules 9. Is it a PMSI? 10. Other (i) Taking Free (ii) Agricultural Goods (iii) Accession (iv) Comingled goods (v) Intellectual Property (vi) Fixed and Floating Charges
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Terminology – PPSA defintion section 10 • • • • • •
Debtor - party who owes money or performance of the primary obligation Grantor - party who gives security interest Security interest – Interest satisfying definition in s 12(1) of the PPSA Secured party - party who obtains a security interest over collateral Collateral - personal property that is subject to a security interest – Can give rise to proceeds - security interest will auto attach to proceeds (s32) Security agreement - agreement or act creating a security (e.g. contract) – Takes effect according to its terms (s18(1))
(2) Is There a Security Interest? Is it Excluded? S8 1. 2. 3. 4. 5. 6.
Real Property interests –8(1)(f) not in exam - Includes interest in a fixture s8(1)(j) Statutory security interests - eg arising under tax laws – e.g. Warehouse Liensmans Act Security interests that arise by operation of law eg liens: 8(1)(b) Set-off arrangements 8(1)(d) – claims from creditor to debtor can be applied against claims owed by debtor to creditor (i.e. you owed me $50, I owed you $110, I now only ow $60) Special purpose trusts - Quistclose trusts Pawnbroker – unless they are licensed and taken in ordinary course of business as a pawnbroker, less than or equal to $5,000 s8(6)
Part 1 : Establishing the PPSA Applies 1. Personal Property - Property other than land (s10) Personal property includes many different kinds of tangible and intangible property, other than real property. Examples include motor vehicles, household goods, business inventory, intellectual property and company shares. Personal property is known as collateral if it is (or is anticipated to be) the subject of a security interest. s3
2. What is Security? Creating a right to a piece of property as well as to the person – at common law: a)
Non possessory – mortgage
-
Charge – instrument; “I hereby charge all of my property to you bank”
i) ii)
Fixed charge: chairs in room; not going anywhere. If always own Macbook that too Floating charge – if what you owned unknown floated above the assets of the party who granted interest. When you defaulted they crystallized above whatever you own. Charge floats over property. When you default fixed over whatever you have then
b) Possessory security interests i) ii)
Lien – (No right of sale) - an instrument that entitles a party to retain possession of encumbered property until to debt has been paid - Lawyers do work and keep all their files – if they don’t pay, keep. have to go to another lawyer who will charge for it all again. Exercise lien over a file. Pledge - Right of sale – Using a pledge to take security operates through use of a bailment whereby the pledgor leaves property with the pledgee” Walk in with valuable watch to pawn shop – give you $50 for watch worth $200. After a month go back charge you $60 for it They already have possession if you don’t pay – just keep it
Personal Property Securities Act 1. 2.
3.
4. 5.
Is it personal property? Is there a security interest? a) Is it excluded in s8? b) What is a security interest? S 12 i) Statute Defintion ii) Case Law Is it a Deemed Security Interests? a) s 12(3) b) PPS Lease S13 Has it attached? S19 Is it enforceable? a) Written agreement s20 b) Enforceability against 3rd parties
6.
Is it perfected? I) Temporary Perfection II) Registration Particulars By Serial Number Description by Proceeds III) Possession IV) Control
7.
Other Issues i) Continuous Perfection ii) Pre-Perfection
8. Default Rules 9. Is it a PMSI? 10. Other (i) Taking Free (ii) Agricultural Goods (iii) Accession (iv) Comingled goods (v) Intellectual Property (vi) Fixed and Floating Charges
-
Terminology – PPSA defintion section 10 • • • • • •
Debtor - party who owes money or performance of the primary obligation Grantor - party who gives security interest Security interest – Interest satisfying definition in s 12(1) of the PPSA Secured party - party who obtains a security interest over collateral Collateral - personal property that is subject to a security interest – Can give rise to proceeds - security interest will auto attach to proceeds (s32) Security agreement - agreement or act creating a security (e.g. contract) – Takes effect according to its terms (s18(1))
(2) Is There a Security Interest? Is it Excluded? S8 1. 2. 3. 4. 5. 6.
Real Property interests –8(1)(f) not in exam - Includes interest in a fixture s8(1)(j) Statutory security interests - eg arising under tax laws – e.g. Warehouse Liensmans Act Security interests that arise by operation of law eg liens: 8(1)(b) Set-off arrangements 8(1)(d) – claims from creditor to debtor can be applied against claims owed by debtor to creditor (i.e. you owed me $50, I owed you $110, I now only ow $60) Special purpose trusts - Quistclose trusts Pawnbroker – unless they are licensed and taken in ordinary course of business as a pawnbroker, less than or equal to $5,000 s8(6)
