The Personal Property Securities Act (PPSA) will affect a wide range of businesses. Some of the key issues businesses which have transaction that could be registered on the PPSR include:
• retention of title clauses ('Romalpa Clause');
• Terms of Trade – both of these documents should be drafted by a commercial solicitor, who will ensure they comply with the PPSA;
• businesses operating in leased premises should seek legal advice on registering a security interest over plant, equipment, furniture, stock etc., that is situated on the leased premises; and
• another potential problem is preferential payments that may have been paid to your business. To protect yourself, you will need to seek legal advice on your Terms of Trade documents and the lodgement of a security interest on the PPSR.
Some of the businesses, which will be affected by the PPSA, include:
• restaurants, shops, offices, warehouses that are being leased from their owners;
• retail shop – retention of title clauses for credit sales;
• trades and sub-contractors – registration of security interests on tools, equipment, vehicle and machinery left on a third party workplace - gaining access to leased premises to retrieve tools, equipment, vehicles etc;
• risk of preferential payment claim by a liquidator, relative to leasing of furniture, fittings, equipment etc., that has been supplied to a third party e.g. a builder;
• wholesaler supplier – retention of title clause and registration of security interests for stock sold and not yet paid for and consignment stock;
• horses and other livestock that have been leased to a third party - registration of your security interest;
• farmers – crops – registration of a security interest in farm produce stored on someone else's premises; and
• equipment renters – registration of security interest.
In addition, other businesses will need to consider the PPSA legislation include:
• motor vehicle dealers;
• ingredient suppliers;
• water craft including boat owners;
• artists for paintings and other works of art;
• livestock on agistment;
• equipment such as harvesting equipment stored at someone else's property;
• share farmers;
• automotive spare parts suppliers;
• second hand motor vehicle dealers; and
• prawn brokers;
• second hand dealers.
The type of transactions potentially effected by PPSA include:
• businesses buying assets – check the PPSR to see if there is any encumbrances on the asset you are proposing to purchase;
• service entity arrangements
• leasing goods – the legislation has introduced the term PPS Lease;
• leaving property at someone else's premises; and
• supplying goods on credit;
• dealing with your business' intellectual property.
• consignment stock;
The PPSA represents a very large change in commercial law, with some people claiming it is the biggest change in the last 200 years. If you have any concerns on your business transactions and how they might relate to the PPSA legislation, our recommendation is that you consult your commercial solicitor for advice on Retention of Title clauses and Terms and Conditions of Trade. Please contact us for a discussion relative to the implementation of an appropriate system, for the PPSR, for your business.
Article provided by http://www.ESSBIZTOOLS.com.au.