Several leading law firms, competitors in the fiercely
competitive legal sector, have worked together in the interest of
their clients to develop a best practice industry approach to
drafting security documents following the commencement of the
Personal Property Securities Act 2009 (Cth) (PPSA). This is a
welcome example of how leading firms can drive the direction and
development of the industry to the benefit of clients and market
The recently implemented PPSA established new rules for the
creation, priority and enforcement of security interests in most
assets other than land.
Since before the operational commencement of the PPSA on 30
January 2012, Australian businesses and their lawyers have been
grappling with the legal and practical considerations of how the
far reaching legislation will affect their business.
Law firms rewrote their standard security documents in response
to the extensive and radical changes introduced by the PPSA. In
doing so, firms took different approaches to some essential
elements of General Security Agreements (GSA), resulting in
extensive negotiations, confusion for clients and unnecessary
In recognition that it is not in clients' interests for
firms to be negotiating their differing views on points of PPSA law
during live transactions, five leading international law firms have
come together to prepare a suggested standard for the core
provisions of a GSA. The PPSA model clauses are consensus positions
which represent a distillation of the firms' thinking on a
range of important issues. The firms involved are:
Herbert Smith Freehills
King & Wood Mallesons
In an environment where businesses are wrestling with constantly
evolving legislative frameworks, this group of firms is pioneering
a new approach to reducing uncertainty and improving efficiency for
clients and the broader market. With a consensus approach,
negotiations where there is no substantive advantage to be gained
can be avoided and the focus can be firmly on delivering commercial
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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