Chattels Transfer KSL Short
Chattels Transfer KSL Short
Chattels Transfer KSL Short
Security Rights
Background
The primary concern for any lender is how to get their
money back. Two basic loan transactions have evolved
in private markets:
• unsecured loan
• secured loan
When borrowers cannot use their assets as collateral for
loans and cannot purchase goods on credit using the
goods themselves as collateral, interest rates on loans
tend to be higher to reflect the risk to lenders.
•In Early English law (around the 16th century) It was
considered that any transfer of property from a
debtor to a creditor, after which the debtor remained
in possession of that property, was a fraudulent act
intended to defraud creditors. This was established in
the Tywne’s case (1601) 76 ER 809.
Facts
•Pierce (debtor) owed Twyne (creditor) £400 and owed
C (creditor) £200. C sued Pierce for the debt. Pierce
then secretly agreed to transfer all of his goods,
amounting to £300, to Twyne. Pierce, however, kept
possession of the goods and continued to use them.
• Thegoods pledged were sheep and Pierce remained in
possession of them, and continued marking and shearing
them.
• IP rights
• Book debts
• Chooses in action
• Negotiable instruments
•Creation of a security right via a security agreement. A
security agreement shall be in writing and signed by the
grantor and identify the creditor. It shall describe the
secured obligation; and describe the collateral
•Registration of the notice and priority once registered
(perfection). Priority determined based on time of
registration. First to register first to acquire rights
•Enforcement of a security right and the applicable law e.g
• As provided for in the security agreement
• Right to sue
• Right to appoint a receiver
• Right to lien
• Lease of the moveable
The MPSR Act applies to the following security rights in moveables
(Sec 4)
• chattel mortgage,
• credit purchase/sale transaction,
• floating and fixed charge,
• pledge, trust indenture, trust receipt, financial lease
• any other transaction that secures payment or performance of an
obligation; and
• security right in book-entry securities under the
• Central Depositories Act, 2000
• the creation, lease or transfer of an interest in land, excluding a
right to payment that arises in
• Still complex
• Alternative means of accessing credit
• Enforcement of rights for the secured creditor
• Nature of moveables
• No unique identifier
• Commingled assets
• Can be stolen, sold, damaged
• Valuation
Assignment:
• Analyze the Rights and obligations of the parties and third-party obligors
PART 4 of the Act