Personal Properties Securities Act
Ordinary course of business examples
A paper presented at the National Commercial Law Seminar Series
Personal Property Securities Act: beyond the transitional period, Melbourne
Barrister and Mediator, Victorian Bar
Senior Fellow, Monash University
If a cut off exception applies then T gets clear title even if SP has a perfected SI and whether or not SP has authorised the dealing
Mainly as consumer protection provision.
G is a furniture retailer. SP has a perfected SI in its inventory. Authorisation in the security agreement permits G to sell in the ordinary course of business.
SP serves a notice on G withdrawing authority
G sells an armchair ton T, a retail customer.
Does T get clear title?
If Rule 3 applied the answer is no.
SP is perfected and has not authoried the dealing.
But s 46 displaces the rule provided that T did not know that the sale was in breach the Security agreement.
T should not be at risk of unpublished restrictions on the right to sell.
G is a furniture retailer and SP1 has an SI in G’s inventory.
G gives SP2 a security interest in one of its armchairs
If SP2 is a purchaser (includes a SP) he wins.
Hence use of term buyer which does not include a secured party s 42
Priority dispute between SP1 And SP2 is resolved by the priority rules in s 55(4) – first in time wins
- If T is a retail customer and rents a computer from G, s 46 also applies because it includes a lessee.
Interest given by the seller
Interest given by the seller or lessee
G is lawyer. SP has a perfected SI in his office furniture and equipment
G sells the furniture and equipment to a secondhand dealer X. X resells it to T.
X takes subject to SP’s SI
S 46 doesn’t apply because not in the OCB of G’s business.
T bought from X but SI give by G.
If G a lawyer and SP has a perfected SI in G’s car. G sells car to T.
T needs to search by VIN and/or ABN of business
If no SI reveled by he search from the time commencing at the start of the day before and the time of payment, T takes free of SP’s SI.
Also if VIN incorrect or error in G’s ABN.