What are the grounds for default?
Security agreement
NO security agreement
- Failure to perform
- Failure to pay obligation when due
What is self-help repossession?
Secured Party can take possession of collateral with NO judicial process after default
UNLESS breach of peace
- Unruly public behaviour
What if there is breach of the peace?
- Secured Party loses authorisation to repossess
- Secured Party can be sued for conversio
- Secured Party is liable for actual damages
What is required for retention of collateral?
- Proposal to other secured parties
- Debtor’s consent
UNLESS they object within 20 days => Must dispose collateral by sale
What can Secured Party do after default?
Self-help repossession
Retention of collateral
Resale of collateral
What are the options for resale of collateral?
Sale
Lease
License
Disposal
Is Buyer subject to existing security interests on collateral?
Superior security interests (NOT subordinate)
Which parties must Secured Party give reasonable notification to for resale of collateral?
Debtor
Sureties
Other secured parties with perfection
UNLESS => NO notification required
- Perishable collateral
- Potentially rapid declining collateral
- Ordinarily sold in recognised market collateral
When must notification be sent for resale of collateral?
Consumer sale
- Within reasonable time
Non-consumer sale
- Within 10 days or more
What is the priority for proceeds of sale of collateral?
1) Costs of repossession + sale
2) Foreclosing Creditor
3) Creditors (lower priority)
4) Debtor (surplus)
What are the consequences for failure to comply with resale requirements?
Liability for damages
Consumer goods
- Liability for min. 10% cash price of goods to Debtor
- Interest charges to Debtor
If Debtor still owes deficiency => Rebuttable presumption that sale proceeds EQUALS debt amount (NO deficiency judgment)
When may Debtor redeem collateral?
Before resale of collateral
Before disposition contract
Before retention of collateral
What is required for Debtor to redeem collateral?
Fulfill ALL obligations secured by collateral
UNLESS Acceleration clause is included in security agreement
- Must tender ENTIRE balance as well
