Possible Changes to the Canadian Personal Property Security Acts 2000

Section 18– Secured Party’s Duty to Provide Information about the Security Agreement

18.(1) The debtor, a creditor, a sheriff, a person with an interest in personal property of the debtor or an authorized representative of any of them may, by an authenticated demand in writing containing an address for reply and delivered to the secured party:

(a) at the secured party's most recent address set out in a registered financing statement containing a description of personal property of the debtor; or

(b) at the current address of the secured party, if known by the person who makes the demand;

require the secured party to send or make available the information specified in subsection (2) to the person making the demand or, if the demand is made by the debtor, to any person at an address specified by the debtor.

18.(2) The information that may be demanded pursuant to subsection (1) may be one or more of the following:

(a) a copy of a security agreement that provides for a security interest held by the secured party in the personal property of the debtor;

(b) an authenticated statement in writing of the amount of the indebtedness and of the terms of payment of the indebtedness, as of the day specified in the demand;

(c) an authenticated written approval or correction of an itemized list of personal property attached to the demand indicating which items are collateral as of the day specified in the demand;

(d) a written approval or correction of the amount of indebtedness and of the terms of payment of the indebtedness as of the day specified in the demand;

(e) sufficient information as to the location of the security agreement or a copy of it to enable a person entitled to receive a copy of the security agreement to inspect it.

18.(14) A secured party who replies to a demand mentioned in subsection (1) is estopped for the purposes of this Act as against:

(a) the person who makes the demand; or

(b) any other person who can reasonably be expected to rely on the reply;

to the extent that the person relies on the reply, from denying:

(c) the accuracy of the information contained in the reply to the demand pursuant to clause (2)(b) or (c) or (d); or

(d) that the copy of the security agreement provided in response to a demand pursuant to clause (1)(a) is a true copy of the security agreement required to be provided by clause (2)(a).

18.(15) A successor in interest mentioned in subsection (9) is estopped for the purposes of this Act as against:

(a) the person who makes the demand mentioned in subsection (1); and

(b) any other person who can reasonably be expected to rely on the reply to the demand;

to the extent that the person relies on the reply, from denying:

(c) the accuracy of the information contained in the reply to the demand pursuant to clauses (2)(b) and (c) and (d); or

(d) that the copy of the security agreement that was provided in response to a demand pursuant to clause (1)(a) is a true copy of the security agreement required to be provided by subsection (2)(a).

COMMENT

1. Minor changes are proposed for section 18. It is suggested that section 18(2)(d) be removed as redundant in the light of section 2(b), and that the cross-references to clause (d) in subsections (14)(c) and (15)(c) be deleted as also redundant.

1. The other proposed changes would confirm that the various written communications contemplated by section 18 must be authenticated by their author in view of their disclosure objectives and third party reliance effects. The new definitions of “authenticated” and “writing” proposed to be added in section 2 would confirm that the relevant communications can be authenticated and transmitted electronically.

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