Conditional Sales Contracts and Security Agreements (11:VI) - Revision history

LSLAP at 19:22, 13 October 2025

2025-10-13T19:22:07Z

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LSLAP at 02:40, 2 September 2024

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	The ''Personal Property Security Act'', RSBC 1996, c 359 [PPSA] governs conditional sales agreements (e.g. the contract is subject to some condition to be fulfilled later) and security contracts. The ''PPSA'' established a new unified system for the registration, priority, and enforcement of transactions where collateral is given to secure payment or the performance of an obligation. The main purpose of the ''PPSA'' is to offer lenders or creditors a system of priority vis-à-vis other creditors where it is necessary for the lender or seller to take an interest in personal property to ensure the obligations of the borrower or purchaser are met. The legislation effectively creates a system for the registration and enforcement of a security interest against personal property.		The ''[https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/96359_01 Personal Property Security Act]'', RSBC 1996, c 359 [''PPSA''] governs conditional sales agreements (e.g. the contract is subject to some condition to be fulfilled later) and security contracts. The ''PPSA'' established a new unified system for the registration, priority, and enforcement of transactions where collateral is given to secure payment or the performance of an obligation. The main purpose of the ''PPSA'' is to offer lenders or creditors a system of priority vis-à-vis other creditors where it is necessary for the lender or seller to take an interest in personal property to ensure the obligations of the borrower or purchaser are met. The legislation effectively creates a system for the registration and enforcement of a security interest against personal property.

	Under s 2, the ''PPSA'' governs every transaction that creates a security interest, regardless of the form of the agreement, even in agreements that do not appear to be security agreements, so long as it is creating a security interest in substance. A “'''security interest'''” is defined in s 1(1) as an interest in goods that secures payment or the performance of an obligation.		Under s 2, the ''PPSA'' governs every transaction that creates a security interest, regardless of the form of the agreement, even in agreements that do not appear to be security agreements, so long as it is creating a security interest in substance. A “'''security interest'''” is defined in s 1(1) as an interest in goods that secures payment or the performance of an obligation.
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	== E. Application of PPSA to Leases ==		== E. Application of PPSA to Leases ==

	Many consumers lease cars instead of buying on credit under a financing agreement. A lease ~~'''~~can~~'''~~ qualify as a security agreement: see [https://www.canlii.org/en/bc/bcca/doc/2007/2007bcca144/2007bcca144.html?autocompleteStr=Daimler%20chr&autocompletePos=3 ~~''Daimler Chrsyler~~ Services Canada Inc. v Cameron'', 2007 BCCA 144] for factors and [https://www.canlii.org/en/bc/bcsc/doc/1995/1995canlii3263/1995canlii3263.html?resultIndex=3 ~~''Re~~ Bronson'' (~~1995~~)~~, 34 CBR~~ (3d) ~~255~~ (BCSC)]. Therefore, if they default and the car is repossessed, the “seize or sue” restriction may apply, but the situation is not always clear-cut. LSLAP clients should be referred to a lawyer.		Many consumers lease cars instead of buying on credit under a financing agreement. A lease can qualify as a security agreement: see ''[https://www.canlii.org/en/bc/bcca/doc/2007/2007bcca144/2007bcca144.html?autocompleteStr=Daimler%20chr&autocompletePos=3 DaimlerChrysler Services Canada Inc v Cameron]'', 2007 BCCA 144 for factors and ''[https://www.canlii.org/en/bc/bcsc/doc/1995/1995canlii3263/1995canlii3263.html?resultIndex=3 Bronson (Re) (Trustee of)]'', 1995 CanLII 3263 (BCSC). Therefore, if they default and the car is repossessed, the “seize or sue” restriction may apply, but the situation is not always clear-cut. LSLAP clients should be referred to a lawyer.

	== F. Bills of Exchange Act ==		== F. Bills of Exchange Act ==

	Under Part V of the ''Bills of Exchange Act'' [''BEA''], a bill of exchange or a promissory note (i.e. an “I owe you”) given for a consumer purchase must be clearly marked “Consumer Purchase” (s 190(1)), and where it is marked, the rights of an assignee of the bill or note are subject to any defence the purchaser would have against the vendor (s 191). Where it is not marked, it is void except in the hands of a holder in due course without notice (s 190(2)). The purpose of Part V is to codify the rule in [https://www.canlii.org/en/on/onca/doc/1962/1962canlii124/1962canlii124.html?resultIndex=1 ''Federal Discount ~~Corp~~ v St Pierre'' (1962~~), 32 DLR~~ (2d) 86.]		Under Part V of the ''Bills of Exchange Act'' [''BEA''], a bill of exchange or a promissory note (i.e. an “I owe you”) given for a consumer purchase must be clearly marked “Consumer Purchase” (s 190(1)), and where it is marked, the rights of an assignee of the bill or note are subject to any defence the purchaser would have against the vendor (s 191). Where it is not marked, it is void except in the hands of a holder in due course without notice (s 190(2)). The purpose of Part V is to codify the rule in ''[https://www.canlii.org/en/on/onca/doc/1962/1962canlii124/1962canlii124.html?resultIndex=1 Federal Discount Corporation Ltd v St Pierre and St Pierre]'', 1962 CanLII 124 (ONCA).

	Part V does not cover private sales (where the seller is not engaged in the business of selling the goods in question), or sales to small businesses or corporations of items to be used in their business. Nor does it cover a purchaser’s loan (i.e. a loan from a lender to a person to enable that person to buy goods and/or services from a seller), subject to s 189(3) below.		Part V does not cover private sales (where the seller is not engaged in the business of selling the goods in question), or sales to small businesses or corporations of items to be used in their business. Nor does it cover a purchaser’s loan (i.e. a loan from a lender to a person to enable that person to buy goods and/or services from a seller), subject to s 189(3) below.

Clicklaw Editor at 20:28, 29 August 2023

2023-08-29T20:28:15Z

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LSLAP at 19:43, 24 August 2023

2023-08-24T19:43:37Z

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Clicklaw Editor: /* D. Third Party Purchaser’s Rights */

2022-10-04T21:03:00Z

D. Third Party Purchaser’s Rights

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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;		:(a) Value is given;
	:b) The debtor has rights in the collateral; and		:(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.		:(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.

Clicklaw Editor: /* C. Disqualification from “Seize or Sue” Provisions */

2022-10-04T21:02:40Z

C. Disqualification from “Seize or Sue” Provisions

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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));		:(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		:(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
	: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)).		:(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.

Clicklaw Editor: /* D. Third Party Purchaser’s Rights */

2022-10-04T20:37:51Z

D. Third Party Purchaser’s Rights

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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;		:a) Value is given;
	* b) The debtor has rights in the collateral; and		: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.		: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.

Clicklaw Editor: /* C. Disqualification from “Seize or Sue” Provisions */

2022-10-04T20:36:44Z

C. Disqualification from “Seize or Sue” Provisions

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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));		: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		: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)).
	* 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.

Clicklaw Editor at 19:38, 3 October 2022

2022-10-03T19:38:18Z

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LSLAP at 22:09, 17 August 2022

2022-08-17T22:09:20Z

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