The Personal Property Securities Act 2009 (Commonwealth) (“the PPSA”) (which is due to commence before February 2012 – see blog dated 5 September 2011) will have an adverse effect on all commercial suppliers who rely on retention of title clauses in their trading terms.
As previously noted, the PPSA sets up a new scheme of registration of security interests in personal property.
The provisions of the Act make it clear that:
- Personal property includes retention of title rights.
- A personal property security is when a secured party takes an interest in personal property as security for any obligation (such as a payment obligation) that involves the supply of secured finance
All suppliers of goods on credit should now:
· Review their terms of trade with a view to ensuring that they meet the requirements of the PPSA, and
· Be in a position to register a financing statement (covering their retention of title interest) on the Personal Property Securities Register, when it commences operation. Registration of a financing statement enables a secured party to ‘perfect’ its security interest.
Commercial lawyers in practice in Victoria should already be reviewing their clients’ terms of trade to ensure compliance with the PPSA.