Most Read Contributor in New Zealand, September 2016
Frustrated at how long it takes and how much it costs to agree
the Personal Property Securities Act (PPSA) clauses in
Australian security documents?
The good news is that a solution has been found to introduce
some consistency into the process.
The bad news is, it depends which Australian law firm
Cutting a track through the regulatory bush
Since the PPSA came into effect in Australia in January 2012,
different law firms have approached its application differently,
and sometimes those differences have been significant and very
But now five of the internationals with a presence in Australia
- Allens, Ashurst, Herbert Smith Freehills, King & Wood
Mallesons and Norton Rose – have got together and developed
a set of model PPSA provisions, including suggested clauses and
Footnotes have been included to explain why they have been
drafted the way they have.
Chapman Tripp comment
The model provisions take a balanced approach between the
interests of security takers and providers. They should be broadly
acceptable to both parties although, inevitably, there will be
negotiation from time to time.
Those relating to the granting of security, contracting out of
the PPSA and exercise of powers are similar to what we would see in
New Zealand. But the Australian provisions retain the concept of
revolving or circulating assets which would not normally be in New
Zealand documents. These provisions are read in conjunction with
the disposals or negative pledge provisions in other transaction
documents so should not be more onerous than what we are used
These terms have not necessarily been agreed to by the other
firms so may not be used by them. However, we are hopeful that
these clauses will limit the amount of negotiation on what are
relatively mechanical provisions.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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Anyone with standard form contracts who deals with small business must review the contracts for potential unfair terms.
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