PRIORITY BETWEEN COMPETING SECURED CREDITORS: EXPLORING THE BORDERLAND BETWEEN PERSONAL PROPERTY SECURITY RULES AND THE COMMON LAW
AbstractIn the context of priority conflicts between two secured parties, the authors examine the relationship between the priority rules of personal property security legislation and the common law rule (nemo dat quod non habet) in light of the interests of secured parties and the policies inherent in the legislation. Using hypothetical fact situations involving security interests given by different debtors, the article attempts to trace the legitimate limits of the first-to-file, and the purchase money security interest, priority rules. The wording of the legislation of various jurisdictions is examined in order to assess the uniformity of concept and treatment across the spectrum of jurisdictions. It is suggested that the various generations of personal property security statutes, from the UCC through the older Canadian statutes to the more recent New Brunswick Personal Property Security Act, exhibit a development to greater sophistication of articulation and enhanced user friendliness. The development is most accurately perceived as making explicit rules and policies which, to a greater or lesser degree, remain implicit in the earlier statutes. The authors suggest that, properly understood, the boundary between the statutory priority rules and the common law is drawn consistently across the statutes of the various jurisdictions.
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