CHAPTER 48:03
PERSONAL PROPERTY SECURITY ACT

ARRANGEMENT OF SECTIONS

   SECTION

PART I
PRELIMINARY

   1.   Citation

   2.   Interpretation

   3.   Scope of the Act

PART II
CREATION OF SECURITY INTERESTS

   4.   Effectiveness of security agreement

   5.   Standards of good faith and commercial reasonableness

   6.   Description of collateral in security agreement

   7.   Inadequate description of collateral as consumer goods

   8.   Description of proceeds not required for enforceability against third parties

PART III
PERFECTION OF SECURITY INTERESTS

   9.   Perfection of security interest

   10.   Continuity of perfection where perfected security interest subsequently perfected in another way

PART IV
CREATION AND PERFECTION OF SECURITY INTERESTS IN PARTICULAR KINDS OF PERSONAL PROPERTY

   11.   Security interests in after-acquired property

   12.   Creation of security interests in after-acquired property

   13.   Continuation of security interests in proceeds

   14.   Continuous perfection of security interest in proceeds

   15.   Temporary perfection of security interests in proceeds in other cases

   16.   Perfection where goods in hands of bailee

   17.   Security interests in crops

   18.   Temporary perfection of security interest in negotiable instrument or investment security returned to debtor

   19.   Temporary perfection of security interest in negotiable document of title or goods returned to debtor

PART V
PRIORITY BETWEEN SECURITY INTERESTS

   20.   Priority of security interests in same collateral when Act provides no other way of determining priority

   21.   Original method of perfection applies to continuously perfected security interest

   22.   Priority in original collateral to continue in proceeds

   23.   Transfer of security interests does not affect priority

   24.   Voluntary subordination of security interests

   25.   Priority of security interest applies to all advances

   26.   Priority of purchase money security interest in collateral or its proceeds, other than inventory or intangibles

   27.   Priority of purchase money security interest in inventory or its proceeds

   28.   Priority of purchase money security interest in intangibles or its proceeds

   29.   Non-proceeds security interest in accounts receivable

   30.   Priority between purchase money security interests in goods or their proceeds taken by seller

   31.   Priority between purchase money security interests in same goods or their proceeds not taken by seller

   32.   Security interests in accessions

   33.   Priority of security interest in goods before they become accessions

   34.   Continuation of security interests in goods that become part of processed or commingled goods

   35.   Limit on value of priority of goods that become part of processed or commingled goods

   36.   Priority where more than one security interest continues in processed or commingled goods

   37.   Priority of purchase money security interest in goods that continues in processed or commingled goods

   38.   Rights of debtor may be transferred

   39.   General priority of security interest in transferred collateral over security interests granted by transferee

   40.   Transfer of debtor's interest in collateral with prior consent of secured party

PART VI
SPECIAL PRIORITY RULES

   41.   Lien has priority over security interest relating to same goods

   42.   When holder of money takes money free of perfected security interest in money

   43.   Priority of creditor who receives payment of debt

   44.   Priority of purchaser of negotiable instrument, document of title, chattel paper and security certificate

   45.   Priority of interests on assignment of account receivable or non-negotiable chattel paper

   46.   Execution creditor has priority over unperfected security interest

   47.   Buyer or lessee of collateral takes collateral free of unperfected security interests

   48.   Buyer or lessee of goods sold or leased in ordinary course of business takes goods free of certain security interests

PART VII
PERSONAL PROPERTY SECURITIES REGISTRY

   49.   Establishment of a Personal Property Security Registry

   50.   Appointment of Registrar

   51.   Registrar may refuse to provide certain services relating to Registry

   52.   Person may register financing statement

   53.   Data required to register financing statement

   54.   Identification of debtor in financing statement

   55.   Identification of secured party in financing statement

   56.   When financing statement not to be registered

   57.   When financing statement to be registered

   58.   Registration of financing statement not to constitute notice or knowledge

   59.   Verification statement to be forwarded to person who registered financing statement

   60.   When financing statement may be registered

   61.   Authorization to register financing statement

   62.   Financing statement may relate to one or more security agreements

   63.   When secured party to notify debtor about registration of financing statement

   64.   Registration of financing statement invalid only if seriously misleading

   65.   When financing statement seriously misleading

   66.   Proof that person actually misled not necessary

   67.   Validity of registration when description of part of collateral is incorrect

   68.   Duration of registration of financing statement

   69.   Renewal of registration

   70.   Registration of financing change statement in respect of transfer of security interest perfected by registration

   71.   Registration of financing change statement in respect of subordinated security interest

   72.   Voluntary amendment to, or discharges of, registration of financing statements

   73.   Discharge of registration relating only to consumer goods

   74.   When debtor may demand registration of financing change statement

   75.   Matters that may be required by demand

   76.   Procedure for non-compliance with demand

   77.   Compulsory amendment or discharge by Court order

   78.   No fee for compliance with demand

   79.   Search of Registry

   80.   Search criteria

   81.   Search purposes

   82.   When registration and search constitutes interference with privacy of individual

   83.   Printed search result receivable as evidence

PART VIII
ENFORCEMENT OF SECURITY INTERESTS

   84.   Application of this Part

   85.   Part not to remedies under the Insolvency Act

   86.   When contracting out of certain provisions in this Part permitted

   87.   Secured party may take possession of and sell collateral

   88.   Secured party may render collateral unusable

   89.   Secured party may apply certain collateral in satisfaction of secured obligation

   90.   Secured party may take possession of and sell collateral

   91.   Duty of secured party selling collateral to obtain best price reasonable obtainable

   92.   Power of sale applies to document of title and related goods

   93.   Methods of sale of collateral

   94.   Notice of sale of collateral

   95.   Extinguishment of subordinate security interests on sale

   96.   Secured party to give statement of account to debtor

   97.   Secured party selling collateral shall pay prior ranking secured parties

   98.   Distribution of surplus

   99.   Surplus may be paid into Court

   100.   Proposal of secured party to retain collateral

   101.   Persons entitled to notice may object to proposal

   102.   Person making objection may be requested by secured party to prove interest

   103.   Position where persons entitled to notice do not object to retention of collateral by secured party

   104.   Secured party shall not damage goods when removing accession

   105.   Entitled persons may redeem collateral

   106.   Debtor may reinstate security agreement

   107.   Limit on reinstatement of security agreement

PART IX
MISCELLANEOUS PROVISIONS

   108.   Entitlement to damages for breach of obligations

   109.   Secured party to provide certain information relating to security interest

   110.   Time for complying with request

   111.   Exemption from complying with request

   112.   Secured party may recover costs arising from request

   113.   Application to Court for compliance with request

   114.   Consequences of not complying with Court order

   115.   Obligation to disclose successor in security interest when request made

   116.   Method of service of notices

   117.   Court may make order concerning service of notice

   118.   How to effect service of notice by post

   119.   How to effect service of notice by facsimile

   120.   How to effect service of notice by electronic mail

   121.   Notices served in court proceedings

   122.   Regulations

   123.   Repeals and savings

PART X
APPLICABLE LAWS

   124.   When Malawi law applies to tangible property

   125.   When Malawi law apply to intangible property

   126.   When Malawi law applies to deposit and investment accounts

   127.   When Malawi law applies to proceeds

   128.   When Malawi law applies to enforcement

   129.   When Malawi law applies to some other matters

PART XI
TRANSITIONAL PROVISIONS

   130.   Interpretation

   131.   Prior security interests continue to be enforceable against third parties during transitional period

   132.   Prior registered security interests deemed to be perfected by registration during transitional period

   133.   Other prior security interests deemed to be perfected during transitional period

   134.   Prior security interests to be perfected during transitional period

   135.   Consequences of not perfecting certain security interests

   136.   Time of registration of certain prior security interests

   137.   Priority of prior security interests during transitional period

   138.   Priority of third party interests during transitional period

8 of 2013
G.N. 41/2015

An Act to reform the law relating to security interests in personal property and, in particular, to provide for the creation of security interests in personal property; the perfection of security interests; the determination of priority between security and other interests in the same personal property; the establishment of a registry of security interests in personal property; the enforcement of security interests in personal property; and for matters connected therewith and incidental thereto

[23RD NOVEMBER 2015 except sections 85, 129 (4) and (5)]

PART I
PRELIMINARY

1.   Citation

   This Act may be cited as the Personal Property Security Act.

2.   Interpretation

   (1) In this Act, unless the context otherwise requires—

   “accessions” means goods that are installed in, or affixed to, other goods without losing their identity;

   “account receivable” means a right to payment of a monetary obligation that is not evidenced by chattel paper, an investment security or by a negotiable instrument, whether or not that obligation has been earned by performance;

   “advance” means the payment of money, the provision of credit or the giving of value;

   “after-acquired property” means personal property that is acquired by a debtor after the security agreement is made;

   “cash proceeds” means proceeds in the form of money, cheques, drafts or deposit accounts in banks or similar institutions;

   “chattel paper” means one or more writings that evidence both a monetary obligation and a security interest in, or lease of, specific goods or specific goods and accessories;

   “collateral” means personal property that is subject to a security interest;

   “commercial consignment” means a consignment where—

   (a)   a consignor has reserved an interest in goods that the consignor has delivered to the consignee for the purpose of sale, lease or other disposition; and

   (b)   both the consignor and the consignee deal in the ordinary course of business in goods of that description but does not include an agreement under which goods are delivered to an auctioneer for the purpose of sale;

   “consumer goods” means goods that are used or acquired for use primarily for personal, domestic or household purpose;

   “control” with respect to deposit and securities accounts exists—

   (a)   automatically upon the creation of a security interest if a bank or other financial institution that maintains the deposit or securities accounts is the secured creditor; or

   (b)   if the bank or other financial institution has concluded a control agreement with a debtor and secured party;

   “Court” means the High Court;

   “crops” means crops and plants, whether grown, growing or yet to be planted, attached to land by roots or forming part of trees, but does not include trees, unless the trees are grown for commercial purposes and sale;

   “debtor” means a person that has an interest in a collateral, and includes—

   (a)   a consignee who receives goods from another person under a commercial consignment;

   (b)   a financial lessee or a lessee under an operating lease for a term of more than one year;

   (c)   a transferor of an intangible; and

   (d)   a buyer that acquires goods subject to a retention of title clause;

   “default” means the occurrence of an event that, under a security agreement, gives a secured party the right to enforce a security interest;

   “document of title” means a writing issued by or addressed to a bailee—

   (a)   that covers goods in the possession of the bailee and are identified or are fungible portions of an identified mass; and

   (b)   in which it is stated that the goods identified in it will be delivered to a named person, or to a transferee of that person, or to a bearer or to the order of a named person;

   “equipment” means goods that are held by a debtor other than as inventory or consumer goods, and used in the operation of the debtor's business;

   “farm products” include crops, fish, livestock and their unborn offspring and products, whether or not grown or raised naturally or artificially;

   “financial lease” means a lease, including a hire-purchase agreement, at the end of which—

   (a)   a lessee automatically becomes the owner of the good that is the object of the lease;

   (b)   the lessee may acquire ownership of the good by paying no more than a nominal price; or

   (c)   the good has no more than a nominal residual value;

   “financing statement” means forms in writing or their electronic equivalent as provided in the Registry Regulations on which information is provided in order to effect, amend, terminate or continue a registration;

   “fungible goods” means goods of which any unit is, by nature or usage of trade, the equivalent of any other like unit, and includes unlike units to the extent that they are treated as equivalents under a security agreement;

   “future advance” means the payment of money, the provision of credit, or the giving of value secured by a security interest, occurring after the security agreement has been concluded, whether or not provided or given under an obligation to do so;

   “goods” means tangible personal property and include farm products, inventory, equipment, consumer goods, trees that have been severed, and petroleum or minerals that have been extracted but does not include chattel paper, a document of title, a negotiable instrument, an investment security or money;

   “intangible” means personal property, other than goods, chattel paper, a document of title, an investment security, money or a negotiable instrument;

   “inventory” means goods that are—

   (a)   held by a person for sale or lease, or that have been leased by the person as lessor;

   (b)   to be provided under a contract for services;

   (c)   raw materials or work in progress; or

   (d)   materials used or consumed in a business;

   “investment security” means a writing, whether or not it is in the form of a security certificate, that is recognized in a place in which it is issued or dealt with as a warrant, option, share, right to participate, or other interest in property or an enterprise, or that evidences an obligation of the issuer, and that, in the ordinary course of business, is transferred by—

   (a)   delivery with any necessary endorsement, assignment, or registration in the records of the issuer or agent of the issuer;

   (b)   an entry in the records of a clearing house or central securities depository;

   (c)   an entry in the records maintained for that purpose by or on behalf of the issuer; or

   (d)   an entry in the records maintained for that purpose by or on behalf of the nominee,

but does not include a writing that evidences a monetary obligation that is secured by an interest in land;

   “land” includes all estates and interests, whether freehold or leasehold, in real property;

   “negotiable instrument” means—

   (a)   a bill of exchange or promissory note within the meaning of the Bills of Exchange Act; or

   (b)   any other writing that evidences a right to payment of money and is of a kind that, in the ordinary course of business, is transferred by delivery with any necessary endorsement; but does not include chattel paper, a document of title or an investment security;

   “new value” means value other than antecedent debt or liability;

   “operating lease” means a lease, other than a financial lease, for a term of more than one year;

   “organization” means any body, whether incorporated or unincorporated;

   “perfected security interest” means the security interest that has been created and becomes effective against third parties by control, possession, registration or temporarily, as the case may be;

   “personal property” includes chattel paper, documents of title, goods, intangibles, investment securities, money and negotiable instruments;

   “possession” in relation to a secured party, means possession of collateral that is in the actual or apparent possession or control of the debtor or the debtor's agent;

   “proceeds” means identifiable or traceable personal property received as a result of sale, other disposition, collection, lease or license of the collateral, including proceeds of proceeds, civil and natural fruits, dividends, distributions, insurance proceeds and claims arising from defects in, damage to or loss of collateral;

   “purchase” means taking by sale, lease, discount, assignment, negotiation, mortgage, pledge, lien, issue, reissue, gift or any other consensual transaction that creates an interest in personal property;

   “purchase money security interest” means—

   (a)   a security interest in collateral retained by a seller that secures the obligation to pay any unpaid portion of the purchase price of the collateral;

   (b)   a security interest taken by a person who gives value for the purpose of enabling the debtor to acquire rights in the collateral, to the extent that the value is applied to acquire those rights;

   (c)   the interest of a financial lessor or a lessor of goods under a lease for a term of more than 1 year; or

   (d)   the interest of a consignor who delivers goods to a consignee under a commercial consignment, but does not include a transaction of sale and lease back to the seller;

   “receiver” has the same meaning as in theInsolvency Act;

   “obligation secured” means an obligation secured by a security interest;

   “secured party” means—

   (a)   a person in whose favor a security interest is created;

   (b)   a consignor;

   (c)   a financial lessor and a lessor who acquired goods under an operating lease for a term of more than one year;

   (d)   a transferee of an intangible;

   (e)   a seller who reserved title to the sold goods; or

   (f)   a trustee or agent of the person mentioned in paragraphs (a) to (e);

   “security agreement” means an agreement between the debtor and secured party that creates or provides for a security interest;

   “security interest” means a property right in personal property that is created by agreement and secures payment or other performance of an obligation, regardless of whether the parties have denominated it as a security interest, but does not include a personal right against a guarantor or other person liable for the payment of the secured obligation;

   “value” means consideration that is sufficient to support a simple contract and includes an antecedent debt or liability and a binding commitment to provide future value;

   “writing” includes an electronic message if the information contained therein is accessible so as to be usable for subsequent reference.

   (2) For the purposes of this Act, the determination of whether goods are consumer goods, equipment, farm products or inventory shall be made at the time when the security agreement is concluded.

3.   Scope of the Act

   (1) This Act shall bind the Government.

   (2) Any person, whether an individual or entity, domestic or foreign, may—

   (a)   create a security interest; and

   (b)   be a debtor or secured party under this Act.

   (3) The provisions of this Act on perfection, registration, priority shall also apply to liens created by judgments or operation of the law.

   (4) The provisions of this Act on perfection, registration, priority and enforcement shall supersede laws applicable to interests created by conditional sale agreements (including agreements to sell subject to retention of title), hire purchase agreements, consignments, operating and financial leases, and outright assignments of intangibles.

   (5) This Act shall not apply to—

   (a)   a lien, charge, or other interest in personal property created by any other Act or by operation of any written law;

   (b)   any right of set-off whether or not arising under or from financial contracts governed by netting agreements; or

   (c)   an interest created or provided for by any of the following transactions—

      (i)   the creation or transfer of an interest in land;

      (ii)   a transfer of a right to payment that arises in connexion with an interest in land, including a transfer of rental payments payable under a lease of or licence to occupy land, unless the right to payment is evidenced by an investment security;

      (iii)   a transfer of present or future claim to wages, salary, pay, commission or any other compensation for labour or personal services of an employee;

      (iv)   an assignment for the general benefit of creditors of the person making the assignment;

      (v)   a transfer of an interest or claim in or under a contract of annuity or life policy of insurance under the Pension Act or other applicable law;

      (vi)   a transfer of a right to damages in tort not related to commercial activity;

      (vii)   the registration of a transfer, assignment, mortgage or assignment of a mortgage of a ship subject to the Inland Waters Shipping Act; and

      (viii)   a transfer or mortgage in a license, concession or other personal privilege issued or granted under the relevant laws.

PART II
CREATION OF SECURITY INTERESTS

4.   Effectiveness of security agreement

   Except as otherwise provided by this Act or any other Act or rule of law or equity, a security agreement shall be effective and create a security interest as between the parties according to its terms.

5.   Standards of good faith and commercial reasonableness

   (1) All rights, duties or obligations that arise under a security agreement or this Act shall be exercised or discharged in good faith and in accordance with reasonable standards of commercial practice.

   (2) A person shall not be regarded as having acted in bad faith merely because the person acted with knowledge of the interest of some other person, unless it is proved that the person knew that his actions would violate the rights of the other person.

6.   Description of collateral in security agreement

   (1) A security agreement shall be enforceable and a security interest created in respect of collateral only if a security agreement contains an adequate description of the collateral that may be generic or specific.

   (2) For the purposes of this Part, a description of collateral is adequate if the collateral is described by—

   (a)   item, kind, type or category;

   (b)   a statement that a security interest is taken in all of the debtor's present and after-acquired property; or

   (c)   a statement that a security interest is taken in all of the debtor’s present and after-acquired property except for specified items or kinds of personal property.

7.   Inadequate description of collateral as consumer goods

   A description is inadequate for the purposes of section 6 if it describes the collateral as consumer goods without specific reference to the item or kind of collateral.

8.   Description of proceeds not required for enforceability against third parties

   Except as otherwise provided in this Act, a security interest in any collateral shall automatically continue in the proceeds thereof, whether or not the security agreement contains a description of the proceeds.

PART III
PERFECTION OF SECURITY INTERESTS

9.   Perfection of security interest

   (1) Except as otherwise provided in this Act, a security interest is perfected when—

   (a)   the security interest has been created; and

   (b)   either—

      (i)   a financing statement has been registered in respect of the security interest;

      (ii)   the secured party, or another person on the secured party's behalf, has possession of the collateral (except where possession is a result of seizure or repossession); or

      (iii)   the secured party, or another person on the secured party’s behalf has control of the collateral that is a deposit account or investment security.

   (2) Subsection (1) shall apply regardless of the order in which creation and either of the steps referred to in paragraph (b) of that subsection occur.

10.   Continuity of perfection where perfected security interest subsequently perfected in another way

   A security interest shall be continuously perfected for the purposes of this Act if—

   (a)   the security interest is perfected under this Act;

   (b)   the security interest is subsequently perfected in another way under this Act; and

   (c)   there is no intervening period during which the security interest is unperfected.

PART IV
CREATION AND PERFECTION OF SECURITY INTERESTS IN PARTICULAR KINDS OF PERSONAL PROPERTY

11.   Security interests in after-acquired property

   A security agreement may provide for security interests in after-acquired property.

12.   Creation of Security interests in after-acquired property

   (1) A security interest in after-acquired property shall be created without written consent or any further act of a debtor.

   (2) Where the after-acquired property is consumer goods, the debtor shall provide written consent.

13.   Continuation of security interests in proceeds

   (1) Except as otherwise provided in this Act, a security interest in collateral that is dealt with or otherwise gives rise to proceeds shall—

   (a)   continue in the collateral that has been dealt, unless the secured party expressly or impliedly authorized the dealing; and

   (b)   extend to the proceeds.

   (2) If the secured party enforces the security interest against both the collateral and the proceeds, its recovery from, the collateral and its proceeds shall be limited to the value of the collateral at the date of the dealing that gave rise to the proceeds.

14.   Continuous perfection of security interest in proceeds

   A security interest shall remain continuously perfected in proceeds if the security interest in the original collateral is perfected by registration of a financing statement that contains a description of the original collateral, if—

   (a)   the proceeds are of a kind that is within description of the original collateral; or

   (b)   the proceeds are cash proceeds.

15.   Temporary perfection of security interests in proceeds in other cases

   If the proceeds are not cash proceeds and not within description of the collateral in the financing statement as set forth in section 14, a security interest in proceeds shall be temporarily perfected until the expiration of ten working days after the proceeds arose. If the secured party does not perfect within ten working days, its security interest in the proceeds will become unperfected.

16.   Perfection where goods in hands of bailee

   A security interest, in goods in the possession of a bailee may be perfected when—

   (a)   the security interest has been created and a financing statement relating to the goods is registered; or

   (b)   possession of a negotiable document of title to the goods has been delivered to the secured party, or the bailee has issued a document of title in the name of the secured party or holds the goods on behalf of the secured party.

17.   Security interests in crops

   (1) Except as otherwise provided in this Act, a security interest can be created and perfected in crops and continues as such before they are planted, while growing and afterwards when cut or separated from the soil.

   (2) A security interest in crops shall be created only with the consent of the mortgagee or lessor under a lease with the duration of no more than three years.

   (3) A perfected security interest in crops shall not be extinguished or prejudicially affected by a subsequent sale, lease, mortgage or other encumbrance of or upon the land on which the crops are growing.

18.   Temporary perfection of security interest in negotiable instrument or investment security returned to debtor

   A security interest in negotiable instruments or certificated securities that has been perfected by possession shall remain perfected until the expiration of ten working days after the secured party made the negotiable instrument or investment security available to the debtor for sale, exchange, presentation, collection, renewal or registration of a transfer.

19.   Temporary perfection of security interest in negotiable document of title or goods returned to debtor

   A security interest in a negotiable document of title or goods held by a bailee that are not covered by a negotiable document of title, shall be temporarily perfected until the expiration of ten working days after the secured party made the negotiable document of title or goods available to the debtor, if—

   (a)   the security interest was perfected by possession; and

   (b)   the secured party delivered the negotiable document of title or goods for the purposes of sale, exchange, loading, unloading, storing, shipping, manufacturing, processing, packaging or otherwise dealing with the goods in preparation for their sale or exchange.

PART V
PRIORITY BETWEEN SECURITY INTERESTS

20.   Priority of security interests in same collateral when Act provides no other way of determining priority

   (1) Priority between security interests in the same collateral is determined as follows—

   (a)   a perfected security interest shall have priority over an unperfected security interest;

   (b)   priority between perfected security interests shall be determined by the order of whichever of the following first occurs in relation to a particular security interest—

      (i)   the registration of a financing statement;

      (ii)   the secured party, or another person on the secured party's behalf, taking possession of the collateral (except where possession is a result of seizure or repossession); or

      (iii)   the secured party, or another person on the secured party’s behalf acquiring control of the collateral; and

   (c)   priority between unperfected security interests in the same collateral shall be determined by the order of creation of the security interests.

   (2) This Act does not affect the priority of wage and similar claims granted to workers under other laws of Malawi.

21.   Original method of perfection applies to continuously perfected security interest

   For the purposes of section 20, a continuously perfected security interest shall be treated at all times as perfected and retain its priority from the date of its original perfection.

22.   Priority in original collateral to continue in proceeds

   The priority of a security interest in original collateral shall also be the priority with respect to its proceeds.

23.   Transfer of security interests does not affect priority

   A security interest that is transferred shall have the same priority as it had at the time of the transfer.

24.   Voluntary subordination of security interests

   (1) A secured party may agree, in a security agreement or otherwise, to subordinate its security interest to any other interest.

   (2) The agreement to subordinate the security interest shall not adversely affect rights of a person who is not a party to the agreement.

   (3) An agreement to subordinate a security interest shall be effective according to its terms between the parties and may also be enforced by a third party if the third party is the person for whose benefit the agreement is intended.

25.   Priority of security interest applies to all advances

   A security interest shall have the same priority in respect of all advances, including future advances.

26.   Priority of purchase money security interest in collateral or its proceeds, other than inventory or intangibles

   A purchase money security interest in collateral or its proceeds, other than inventory, shall have priority over a non-purchase money security interest in the same collateral created by the same debtor if the purchase money security interest in the collateral or its proceeds is perfected not later than ten working days after the day on which the debtor, or another person at the request of the debtor, obtained possession of the collateral.

27.   Priority of purchase money security interest in inventory or its proceeds

   A purchase money security interest in inventory or its proceeds shall have priority over a non-purchase money security interest in the same collateral given by the same debtor if the purchase money security interest in the inventory or its proceeds is perfected at the time the debtor, or another person at the request of the debtor, obtains possession of the collateral.

28.   Priority of purchase money security interest in intangibles or its proceeds

   A purchase money security interest in an intangible or its proceeds shall have priority over a non-purchase money security interest in the same collateral given by the same debtor if the purchase security interest in the intangible or its proceeds is perfected not later than ten working days after the day on which the security interest in the intangible was created.

29.   Non-proceeds security interest in accounts receivable

   A security interest in accounts receivable that is given for new value shall have priority over a purchase money security interest in the accounts receivable as proceeds of inventory if the security interest in the accounts receivable is registered before the purchase money security interest.

30.   Priority between purchase money security interests in goods or their proceeds taken by seller

   A purchase money security interest in goods or their proceeds taken by a seller, lessor or consignor of a collateral, shall have priority over any other purchase money security interest in the same collateral given by the same debtor to a secured party that is not a seller, lessor or consignor of that collateral if the purchase money security interest in goods or their proceeds is perfected—

   (a)   in the case of inventory, at the time the debtor, or another person at the request of the debtor, obtained possession of the collateral; or

   (b)   in the case of collateral, other than inventory, not later than ten working days after the day on which the debtor, or another person at the request of the debtor, obtained possession of the collateral.

31.   Priority between purchase money security interests in same goods or their proceeds not taken by seller

   Priority between purchase money security interests in the same goods or their proceeds that have not been taken by a seller, lessor or consignor, and those that have been given by the same debtor, shall be determined in accordance with section 20.

32.   Security interests in accessions

   A security interest in goods that becomes an accession shall continue in the accession.

33.   Priority of security interest in goods before they become accessions

   Except as otherwise provided in this Act, a security interest in goods that is created and perfected before the time when the goods become an accession shall have priority over a claim to the goods as an accession made by a person with an interest in the accessions whole.

34.   Continuation of security interest in goods that become part of processed or commingled goods

   A perfected security interest in goods that subsequently security becomes part of a product or mass shall continue as a perfected security interest in the product or mass if the goods are manufactured, assembled or commingled in such a way that their processed or identity is lost in the product or mass.

35.   Limit on value of priority of goods that become part of processed or commingled goods

   If more than one security interest is perfected in the goods before they become part of a product or mass, the security interests rank equally in proportion to the value of the goods at the time they became part of the product or mass.

36.   Priority where more than one security interest continues in processed or commingled goods

   (1) A perfected security interest continuing in the product or mass shall have priority over an unperfected security interest continuing in the same product or mass.

   (2) If more than one unperfected security interest continues in the same product or mass, each unperfected security interest shall be entitled to share in the product or mass according to the ratio that the obligation secured by the unperfected security interest bears to the sum of the obligations secured by all unperfected security interests in the same product or mass.

37.   Priority of purchase money security interest in goods that continues in processed or commingled goods

Notwithstanding section 36, a perfected purchase money security interest in goods that continues in a product or mass shall have priority over—

   (a)   a non-purchase money security interest in the goods that continues in the product or mass; and

   (b)   a non-purchase money security interest in the product or mass given by the same debtor.

38.   Rights of debtor may be transferred

   (1) The rights of a debtor in collateral may be transferred despite a provision in the security agreement prohibiting transfer or declaring a transfer to be a default.

   (2) A transfer by the debtor shall not prejudice the rights of the secured party under the security agreement, including the right to treat a prohibited transfer as an act of default.

   (3) In this section, transfer includes a sale, the creation of a security interest or a transfer under judicial enforcement proceedings.

39.   General priority of security interest in transferred collateral over security interests granted by transferee

   If a debtor transfer an interest in collateral that, at the time of the transfer, is subject to a perfected security interest, that security interest shall have priority over any other security interest granted by the transferee.

40.   Transfer of debtor’s interest in collateral with prior consent of secured party

   (1) If a security interest is perfected by registration and the debtor transfers all or part of its interest in the collateral, the security interest in the transferred collateral shall remain perfected against such collateral and, if the security interest extends to after-acquired property, the security interest in the transferred collateral shall remain perfected against any collateral that the transferee acquires within fifteen days.

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