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Difference between revisions of "Conditional Sales Contracts and Security Agreements (11:VI)"
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Conditional Sales Contracts and Security Agreements (11:VI) (view source)
Revision as of 05:25, 13 August 2016
, 05:25, 13 August 2016→D. Third Party Purchaser’s Rights
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== D. Third Party Purchaser’s Rights == | == D. Third Party Purchaser’s Rights == | ||
Under | 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 third party’s priority over the creditor ends if there is knowledge of the security agreement itself rather than knowledge that the sale constitutes a breach. Under s 1(2), “knowledge” is judged objectively rather than subjectively (i.e. would a reasonable person know?). | The third party’s priority over the creditor ends if there is knowledge of the security agreement itself rather than knowledge that the sale constitutes a breach. Under s 1(2), “knowledge” is judged objectively rather than subjectively (i.e. would a reasonable person know?). | ||
'''NOTE:''' Even 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 (s 28). | '''NOTE:''' Even 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 (s 28). | ||
== E. Application of PPSA to Leases == | == E. Application of PPSA to Leases == | ||