The commencement of the Personal Property Securities Act (2009) –the "PPSA" is now scheduled for early 2012 after yet another delay. If your business involves the supply of goods and you haven't yet considered the impact of the PPSA on your business, now is the time!

The type of "security interests" covered by the PPSA is quite broad. This means that certain transactions which are not traditionally regarded as creating security may now give rise to a security interest which needs to be registered.

Supplying goods on a retention of title basis (meaning that the seller retains legal title to the goods, even after delivery to the purchaser, until payment is received), is one of them. Currently, as a supplier of goods on a retention of title basis your right to be paid is "secured" by the fact that you hold legal title to the goods, and on the insolvency of the customer you are able to enforce this "security‟ by repossessing the property you own.

Once the PPSA is in force, title or ownership of the goods no longer offers sufficient protection. Failure to perfect your retention of title security will mean that you will lose ownership of the goods and become an unsecured creditor.

In order to ensure that your business is properly protected and able to enforce its right (for example, to seize possession of the goods in case of non-payment), you should consider:

  • ensuring you and your customers have entered into a "security agreement" –usually the terms and conditions upon which you sell goods. This agreement needs to provide a suitable description of the goods;
  • assessing whether your terms and conditions have excluded relevant provisions of the PPSA that you are permitted to contract out of; and
  • ensuring that your confidentiality arrangements are such that you won't be breaching them by registering the security interest on the national register.The good news for businesses is that you have an additional couple of months at least to get your terms in order before the PPSA comes into force in early 2012.

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