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Law in Context

Abstract from Volume 30 (2014) Banking and Finance: Perspectives on Law and Regulation

The Personal Property Security Interest: Identifying Some Essential Attributes

Sheelagh McCracken is Professor of Finance Law at Sydney Law School, University of Sydney.

While difficulty in classifying specific arrangements as security interests often arose at common law, the essential attributes of each type of security interest were nonetheless readily identifiable. Drawing on relatively recent Canadian cases, this article explores how the expanded notion of a security interest arising under the Personal Property Securities Act 2009 (Cth) might be characterised. While agreeing with a view developed in other PPS jurisdictions that the interest should be interpreted as fixed and legal in nature irrespective of the type of transaction under which it arises, the article queries a not uncommon characterisation of that interest as necessarily a charge. The article also analyses whether the interest could be conceptualised more simply as a statutory interest the precise content of which varies according to the transaction under which it arises. Acknowledgement that the security interest can be constituted by differing bundles of rights would support a sometimes controversial argument that existing learning on common law distinctions between security transactions remains important, even though most consequences of such distinctions are removed by the Act. Such a conceptualisation might nonetheless help to identify and explain the extent to which recourse should be sought to general law rules to enable the Act to operate effectively within its local commercial law framework.

(2014) Vol 30 Law in Context p146

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