Why is the Personal Property Securities Act 2009 C’th (PPSA) so important to your business?
What is the PPSA?
The PPSA is one of the most significant commercial law reforms in recent times, which governs the validity, enforceability and priority of security interests in personal property. The PPSA came into effect on 30 January 2012.
What is personal property? Personal property is all forms of property, other than real estate. It includes tangible property such as cash, stock in trade, artworks, motor vehicles, boats, aircraft, equipment, as well as intangible property such as patents, licences and financial property. It also includes both consumer and commercial property.
Why is it so important?
If you sell goods using retention of title contracts (i.e. where your customer has possession of goods, but not title until payment is made in full), if you hire or lease plant and equipment, or supply any goods on consignment, if you have not already registered your security interest in such goods and your customer becomes insolvent, you may be required to surrender such goods. Whilst these goods may be yours, if an Administrator is appointed and you have not registered your security in such goods, the goods may be vested in the Administrator and you may have to forfeit your right to them. This can be significant, especially if your business hires out thousands of dollars’ worth of equipment or even provides goods to a customer on credit terms.
What do you need to do?
- For starters, don’t bury your head in the sand. Ignoring the risks can have pretty serious consequences as recent Court cases have demonstrated.
- Perfect (or register) your security on the Personal Properties Securities Register- in the right manner and on time.
- Ensure that your terms and conditions of trade include provisions for the PPSA, especially if you operate on credit terms.
