The PPSA and Terms of Trade
The Personal Property Securities Act 1999 (“PPSA”) with the Personal Property Securities Register (“PPSR”) have now been in existence for over 10 years in New Zealand. Despite this we here at Burton & Co still find that many of our clients are not familiar with basic PPSR registration requirements and often lose out in cases where they have supplied goods to a customer on credit, believing that they have reserved their title in the goods until they get paid, only to lose out in situations where the customer is put into liquidation.
Common Scenario
A client calls advising me that a customer of theirs, that they have supplied goods to on credit, has been placed in liquidation and they would like to take back their goods and seek recovery of their unpaid accounts.
My first question: please provide me with a signed copy of your terms of trade that state you have reserved your title in the goods, with the customer in question.
Their response: we don’t have any as our terms of trade are simply posted out on the back of our invoice.
My response: you have a (big) problem and if the customer in liquidation has a creditor such as a bank with a valid PPSA security interest over all the company’s assets (such as a GSA) then you are unlikely to see your goods again and/or recover any moneys owing.
A harsh but all too often occurrence in these tight economic times.
Get the Basics Right
How do you avoid the above? Do two, relatively simple, things correctly.
These are:
1. Make sure your terms of trade, with a retention of title provision, are in writing and signed by the customer and that you hold a copy on file.
2. Before you supply any goods to the customer on credit make sure you register your security interest in the goods (your retention of title as such) on the PPSR.
If you do the above, you will stand a far greater chance of being successful in a creditor claim situation.
If you need help with any PPSA or PPSR issue we here at Burton & Co can help. Please also note that the government website is also very useful: www.ppsr.govt.nz.
For further help contact Hamish Taylor at [email protected]