Term
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Definition
| Special rules and general rules |
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Term
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Definition
| A buyer or leasee of goods in the ordinary course of business takes the goods free of any perfected or non-perfected security interest, whether or not the buyer or leasee has knowledge of it, unless the buyer or leasee has knowledge that the sale or lease constitues a breach of the security agreement under which the security interest was created. |
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Term
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Definition
| An unperfected security interest is subordinate to the interest of a transferee who acquires the goods under a transaction that is not a security interest, gives value, and acquires the interest without knowledge of the security interest and before the security interest is perfected. |
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Term
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Definition
| Priority between perfected security interests in the same collateral is determined by the order of occurence of the registration of a financing statement, possession of collateral, or perfection, whichever is earliest. |
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Term
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Definition
| A perfected security interest has priority over an unperfected security interest. |
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Term
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Definition
| Priority between unsecured security interest is determined by the order of attachment of the security interest. |
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Term
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Definition
| A continuously perfected interest shall be treated at all times as having been perfected by the method by which it was originally perfected. |
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Term
| The Robert Simpson Company Ltd. v. Shadlock and Duggan |
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Definition
| Perfected interest takes priority over unperfected interest. Notice is irrelevant. The PPSA takes priority over special priority rules, common law and equity. |
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Term
| Subordination of Interest |
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Definition
| A secured party may subordinate their interest, and the subordination is effective according to its terms between the parties and to any third party that is effected by the subordination or was intended to be effected. PPSA, s 40. |
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Term
| Royal Bank of Canada v. General Motors |
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Definition
| Shows how the transfer of priority between parties affects both the parties who agreed to the transfer, and third parties. The party receiving priority from the party who subordinated their priority benefits from the new priority up until the amount that the party who subordinated their interest would have received, but no more. The remaining collateral is then distributed to the other parties according to the new priority order. |
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Term
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Definition
- A, B, and C have a secured interest in debtors collateral.
- A subordinates its interest to C.
- Collateral is sold and there is not enough for each claim.
- Amount owed to A is paid to C (up to limit of C's claim to A).
- Then B is paid (if collateral remains).
- Then A (if collateral remains).
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