Unfair preferences and unperfected security interests

Take the scenario where your company has supplied a customer with goods on credit.  The standard terms and conditions of supply grant your company security over the goods supplied until they are paid for.  In order for that security to be perfected, the interest granted needed to be registered on the Personal Property Security Register (PPSR).  If for example, the interest was not registered or if it was, it was invalid for technical reasons then your company may be at risk. [Read more…]

Loan agreements – an overview

A loan agreement (Loan Agreement) is a formal document under which one party (Lender) advances funds to another (Borrower), subject to the Borrower’s obligation to repay that money.  In any situation involving a loan, even between friendly or related parties, it is considered best to enter into a formal Loan Agreement to protect both the Lender’s and Borrower’s interests.

Loan Agreements range from the relatively straightforward to the exceedingly complex. [Read more…]

Purchase Money Security Interests (PMSIs) and super priority

The general rule for resolving competing security interests is, in a general sense, first in best dressed.  In other words, a perfected security interest will take priority over all other security interests perfected after it.  There are of course certain exemptions to this principle, with one major exemption being the “super priority” enjoyed by purchase money security interests (PMSIs). [Read more…]

Vesting of unperfected security interests on liquidation – register or perish!

Under section 267(2) of the Personal Property Securities Act 2009 (Cth) (PPSA), a security interest granted by a company or individual (Grantor) in favour of another (Secured Party), may, if it is not previously perfected, upon insolvency or bankruptcy of the Grantor (as the case requires), vest with the Grantor and not the Secured Party.   In other words you may lose the property which is subject of the unperfected security interest! [Read more…]

Importance of retention of title clauses in commercial contracts

What is a retention of title clause?

A retention of title (RoT) clause is typically contained within a sale agreement or a company’s standard terms of business (TOB), whereby another business has possession of certain goods (Collateral), but does not acquire the legal title until the purchase price is paid in full. [Read more…]

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Tel: 07 3221 0013

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