- Possible Changes to the Canadian Personal Property Security Acts 2000
- Section 2(1) – Definitions
- Section 2(7) – Inter-jurisdictional Harmonization
- Section 3 – Scope of Application of the PPSA
- Section 4 – Exclusions from the Act
- Sections 5-8 – Conflict of Laws Provisions
- Section 9 – Effectiveness of Security Agreements
- Section 10 – Evidentiary Requirements for Security Agreements
- Section 12 – Attachment of Security Interests
- Section 13 – Security in After-Acquired Collateral
- Section 14 – Future Advances
- Section 17 – Rights and Obligations of Secured Party
- Section 18– Secured Party’s Duty to Provide Information about the Security Agreement
- Section 19 – Perfection of Security Interests
- Section 20 – Subordination of Unperfected Security Interests
- Section 21 - Deemed Damages Recoverable
- Section 24 – Perfection by Possession
- Section 29 – Security Interests in Returned, Seized or Repossessed Goods
- Section 30 – Priority of Buyers and Lessees of Goods and Transferees of Licenses
- Section 31 – Priority of Holders and Purchasers of Money and Documentary Intangibles
- Section 32 – Priority of Repairers’ Liens
- Section 34 – Priority of Purchase Money Security Interests
- Section 35 – Residual Priority Rules
- Section 41 – Effects on Account Debtors of an Assignment of Accounts or Chattel Paper
- All Pages
Section 41 – Effects on Account Debtors of an Assignment of Accounts or Chattel Paper
41.(10) Within 15 days after receiving an authenticated demand in writing from the assignor, the assignee shall send to an account debtor who has received notice of the assignment, an authenticated notice in writing that releases the account debtor from any further obligation to the assignee if:
(a) all of the obligations under the security agreement to which the assignment relates have been performed;
(b) the assignee is not committed to make advances, incur obligations, or otherwise give value; and
(c) the assignment relates to a transaction referred to in subsection 3(1).
Derived from revised article 9-209, proposed new subsection 41(10) would add a useful measure of protection for account debtors on an account or chattel paper which has been assigned as collateral under a ‘true’ security agreement within subsection 3(1) of the Act. If all outstanding obligations under the security agreement to which the assignment relates have been performed, and the secured party is not committed to extend further advances or otherwise incur any further obligations to the debtor, the proposed subsection would empower the debtor to require the secured party to send a written notice to any account debtor to whom a notice of the assignment has been sent, releasing the account debtor from any further obligations to the secured party.
In the fall of 1998, new Article 9 was disseminated to each state, to be introduced and adopted with a common effective date of July 1, 2001.
The Act has not yet been proclaimed in the Northwest Territories and Manitoba. However, at the annual meeting of the CCPPSL in May 2000 in Montreal, representatives of these jurisdictions stated that they expected proclamation to take place within the coming year. The Ontario Branch of the Canadian Bar Association has recommended changes which would bring the Ontario PPSA closer in line with the CCPPSL Model Act, particularly in the critical area of scope: see Submission to the Minister of Consumer and Commercial Relations Concerning the Personal Property Security Act (Canadian Bar Association – Ontario: 21 Oct 1998). However, that recommendation has not been acted upon by government.
Readers should be aware that there are a number of minor differences between the New Brunswick and Saskatchewan versions of the Model Act. For present purposes, the most significant of these are: (1) the addition in the New Brunswick version of “a sale of goods without a change of possession” to the list of deemed security interests to which the Act applies pursuant to section 3; (2) the use of registration of a notice of judgment in the Personal Property Registry as the relevant point for determining priority between an unperfected security interest and a judgment creditor pursuant to section 20.
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