5,109
edits
Difference between revisions of "Conditional Sales Contracts and Security Agreements (11:VI)"
From Clicklaw Wikibooks
Conditional Sales Contracts and Security Agreements (11:VI) (view source)
Revision as of 00:09, 10 November 2019
, 00:09, 10 November 2019no edit summary
(Updating to 2019 Version) |
|||
| Line 46: | Line 46: | ||
Under ss 30(3) and 30(4), where a third party purchases collateral in the form of consumer goods worth less than $1,000, and the third party does not have knowledge of the security agreement between the vendor and the creditor, the third party takes the item free of the creditor’s interest, even if registered. This is known as the “garage sale” defence. The purchaser is known more commonly as a ''bona fide'' purchaser for value without notice. | Under ss 30(3) and 30(4), where a third party purchases collateral in the form of consumer goods worth less than $1,000, and the third party does not have knowledge of the security agreement between the vendor and the creditor, the third party takes the item free of the creditor’s interest, even if registered. This is known as the “garage sale” defence. The purchaser is known more commonly as a ''bona fide'' purchaser for value without notice. | ||
The third party’s priority over the creditor ends if there is knowledge of the security | The third party’s priority over the creditor ends if there is knowledge of the pre-existing security interest. Under s 1(2), “knowledge” is judged objectively rather than subjectively (i.e. would a reasonable person know?). | ||
:'''NOTE:''' If the creditor’s interest in the collateral does not continue because the third-party purchaser takes title free of that interest, the creditor’s interest will continue in the proceeds of the sale by the debtor to the purchaser if it is continuously perfected under ss 28(2) or perfected within 15 days under ss 28(3). | :'''NOTE:''' If the creditor’s interest in the collateral does not continue because the third-party purchaser takes title free of that interest, the creditor’s interest will continue in the proceeds of the sale by the debtor to the purchaser if it is continuously perfected under ss 28(2) or perfected within 15 days under ss 28(3). | ||
