The PPSA superseded about 70 State and Commonwealth statutes that effected the creation and enforcement of security interests over personal property. There is now one national PPS Register that operates 24/7 as a notice board on which you will need to register your security interests.
The biggest change that the new law has introduced is that “title is no longer king” and that registration is everything. If you fail to register your interests in your property another party with a registered interest may acquire an interest in your property free of your interest. Further, your interest may not be enforceable against your customer or other secured party (such as your customer’s bank) in the event of your customer’s default, liquidation or bankruptcy. You may end up simply being an unsecured creditor of your customer- even though you are still technically the legal owner of the property that you supplied them.
In summary, the new laws introduced a whole new new regime for the registration, enforcement and determination of priorities relating to what are now called “security interests” that affect all personal property throughout Australia.
The new laws affect you if you provide goods under a retention of title (“Romalpa”) arrangement or you lease, hire, consign or “bail”(i.e. allow someone else to possess or use) your goods, equipment, machinery or other property.
The arrangements you make with your customers are “security interests” under the PPSA and must be properly documented and registered in order to be enforceable against your customer or your customer’s liquidator.
You should make sure that your credit application forms, your Trading Terms, your Hire Terms and your customer guarantee documents are up to- date and comply with the requirements of the PPSA and the Australian Consumer law.
You should also make sure that your invoices and your statements include appropriate wording that is consistent with your new Trading and Hire Terms. You also need to update a number of your policies and procedures to cope with the new PPSA arrangements.
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