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PERSONAL PROPERTY SECURITIES ACT 2009 - SECT 20

Enforceability of security interests against third parties

General rule

             (1)  A security interest is enforceable against a third party in respect of particular collateral only if:

                     (a)  the security interest is attached to the collateral; and

                     (b)  one of the following applies:

                              (i)  the secured party possesses the collateral;

                             (ii)  the secured party has perfected the security interest by control;

                            (iii)  a security agreement that provides for the security interest covers the collateral in accordance with subsection (2).

Note:          For possession and control of collateral, see Part 2.3.

Written security agreements

             (2)  A security agreement covers collateral in accordance with this subsection if:

                     (a)  the security agreement is evidenced by writing that is:

                              (i)  signed by the grantor (see subsection (3)); or

                             (ii)  adopted or accepted by the grantor by an act, or omission, that reasonably appears to be done with the intention of adopting or accepting the writing; and

                     (b)  the writing evidencing the agreement contains:

                              (i)  a description of the particular collateral, subject to subsections (4) and (5); or

                             (ii)  a statement that a security interest is taken in all of the grantor's present and after-acquired property; or

                            (iii)  a statement that a security interest is taken in all of the grantor's present and after-acquired property except specified items or classes of personal property.

Methods of signing writing

             (3)  Without limiting subparagraph (2)(a)(i), for the purposes of that subparagraph a grantor is taken to sign writing if, with the intention of identifying the grantor and adopting, or accepting, the writing, the person applies:

                     (a)  writing (including a symbol) executed or otherwise adopted by the person; or

                     (b)  writing wholly or partly encrypted, or otherwise processed, by the person.

Note:          For the meaning of writing , see section 10.

Personal property descriptions--consumer property, equipment and inventory

             (4)  If particular personal property is described using the term "consumer property" or "commercial property" in the writing evidencing a security agreement, subparagraph (2)(b)(i) is satisfied only if the personal property is more particularly described, in addition, by reference to item or class.

             (5)  If particular personal property is described using the term "inventory" in the writing evidencing a security agreement, subparagraph (2)(b)(i) is satisfied only while the personal property is held or leased by the grantor as inventory.

Proceeds

             (6)  A security interest in proceeds is enforceable against a third party whether or not the security agreement providing for the security interest contains a description of the proceeds.

Note:          Section 32 deals with whether a security interest in collateral attaches to proceeds of the collateral.



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