Personal Property Security Act

CHAPTER 13

OF THE

ACTS OF 1995-96

If you are searching this statute, note that it consists of five documents.

Short title

1 This Act may be cited as the Personal Property Security Act. 1995-96, c. 13, s. 1.

Interpretation

2 In this Act,

(a) "accession" means goods that are installed in or affixed to other goods;

(b) "account" means a monetary obligation not evidenced by chattel paper, a security or an instrument, whether or not the obligation has been earned by performance;

(c) "advance" means the payment of money, the provision of credit or the giving of value and includes any liability of the debtor to pay interest, credit costs and other charges payable by the debtor in connection with an advance or the enforcement of a security interest securing the advance;

(d) "building" means a structure, erection, mine or work built, constructed or opened on or in land;

(e) "building materials" means materials that are incorporated into a building and includes goods attached to a building so that their removal

(i) would necessarily involve the dislocation or destruction of some other part of the building and cause substantial damage to the building, apart from the loss of value of the building resulting from the removal, or

(ii) would result in weakening the structure of the building or exposing the building to weather damage or deterioration,

but does not include

(iii) heating, air conditioning or conveyancing devices, or

(iv) machinery installed in a building or on land for use in carrying on an activity in the building or on the land;

(f) "chattel paper" means one or more writings that evidence both a monetary obligation and a security interest in, or a lease of, specific goods or specific goods and accessions;

(g) "collateral" means personal property that is subject to a security interest;

(h) "commercial consignment" means a consignment under which goods are delivered for sale, lease or other disposition to a consignee who, in the ordinary course of the consignees business, deals in goods of that description, by a consignor who

(i) in the ordinary course of the consignors business, deals in goods of that description, and

(ii) reserves an interest in the goods after they have been delivered,

but does not include an agreement under which goods are delivered to

(iii) an auctioneer for sale, or

(iv) a consignee for sale, lease or other disposition if the consignee is generally known to the creditors of the consignee to be selling or leasing goods of others;

(i) "consumer goods" means goods that are used or acquired for use primarily for personal, family or household purposes;

(j) "Court" means the Supreme Court of Nova Scotia;

(k) "creditor" includes an assignee for the benefit of creditors, an executor, an administrator or a guardian of a creditor;

(l) "crops" means crops, whether or not matured, and whether naturally grown or planted, attached to land by roots or forming part of trees or plants attached to land, and includes trees only if they are

(i) being grown as nursery stock,

(ii) being grown for uses other than for the production of lumber and wood products, or

(iii) intended to be replanted in another location for the purpose of reforestation;

(m) "debtor" means

(i) a person who owes payment or performance of an obligation secured, whether or not that person owns or has rights in the collateral,

(ii) a person who receives goods from another person under a commercial consignment,

(iii) a lessee under a lease for a term of more than one year,

(iv) a transferor of an account or chattel paper,

(v) a seller under a sale of goods without a change of possession,

(vi) in Sections 18, 25, 27 and 59, subsections 60(15) and 62(8) and Section 67, the transferee of a debtors interest in the collateral, and

(vii) if the person referred to in subclause (i) and the owner of the collateral are not the same person,

(A) where "debtor" is used in a provision dealing with the collateral, an owner of the collateral,

(B) where "debtor" is used in a provision dealing with the obligation, the obligor, and

(C) where the context permits, both the owner and the obligor;

(n) "default" means

(i) the failure to pay or otherwise perform the obligation secured when due, or

(ii) the occurrence of any event or set of circumstances whereupon, under the terms of the security agreement, the security interest becomes enforceable;

(o) "document of title" means a writing issued by or addressed to a bailee

(i) that covers goods in the bailees possession that are identified or that are fungible portions of an identified mass, and

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

(p) "equipment" means goods that are held by a debtor other than as inventory or consumer goods;

(q) "financing change statement" means the data authorized by the regulations to be entered in the Registry to renew, discharge or otherwise amend a financing statement;

(r) "financing statement" means the data authorized by the regulations to be entered in the Registry to effect a registration for the purpose of perfecting a security interest in collateral pursuant to this Act and, where the context permits, includes

(i) a financing change statement, and

(ii) a security agreement registered pursuant to the Assignment of Book Debts Act, the Bills of Sale Act, the Conditional Sales Act or the Corporations Securities Registration Act before the coming into force of this Act, together with any writing that was registered with the agreement or registered to rectify, amend or renew the agreement;

(s) "fixture" does not include building materials;

(t) "future advance" means an advance, whether or not made pursuant to an obligation and includes advances and reasonable costs incurred and expenditures made for the protection, maintenance, preservation or repair of the collateral;

(u) "goods" means tangible personal property, fixtures, crops and the unborn young of animals but does not include a document of title, chattel paper, a security, an instrument, money or trees, other than crops, until they are severed or minerals until they are extracted;

(v) "instrument" means

(i) a bill of exchange, note or cheque within the meaning of the Bills of Exchange Act (Canada),

(ii) any other writing that evidences a right to payment of money and is of a type that in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment, or

(iii) a letter of credit or an advice of credit if the letter or advice states that it must be surrendered on claiming payment under it,

but does not include

(iv) a document of title, chattel paper or a security, or

(v) a writing that provides for or creates a mortgage or charge in respect of an interest in land that is specifically identified in the writing;

(w) "intangible" means personal property that is not goods, a document of title, chattel paper, a security, an instrument or money;

(x) "inventory" means goods that are

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

(ii) to be furnished or that have been furnished under a contract of service,

(iii) raw materials or work in progress, or

(iv) materials used or consumed in a business or profession;

(y) "lease for a term of more than one year" includes

(i) a lease of goods for an indefinite term including a lease for an indefinite term that is determinable by one or both parties within one year after its execution,

(ii) a lease of goods initially for a term of one year or less if the lessee, with the consent of the lessor, retains uninterrupted or substantially uninterrupted possession of the leased goods for more than one year after the lessee, with the consent of the lessor, first acquired possession of the goods, but the lease does not become a lease for a term of more than one year until the lessees possession extends beyond one year, and

(iii) a lease of goods for a term of one year or less where the lease provides that it is renewable for one or more terms automatically or at the option of one of the parties or by agreement of the parties if the total terms, including the original term, may exceed one year,

but does not include

(iv) a lease of goods by a lessor who is not regularly engaged in the business of leasing goods,

(v) a lease of household furnishings or appliances as part of a lease of land where the goods are incidental to the use and enjoyment of the land, or

(vi) a lease of goods of a prescribed kind, regardless of the length of the term of the lease;

(z) "minerals" includes oil, gas and hydrocarbons;

(aa) "money" means a medium of exchange authorized by the Parliament of Canada as part of the currency of Canada or authorized or adopted by a foreign government as part of its currency;

(ab) "obligation secured" means, for the purpose of determining the amount payable under a lease that secures payment or performance of an obligation,

(i) the amount originally contracted to be paid as rent under the lease,

(ii) any other amount payable under the terms of the lease, or

(iii) the amount, if any, required to be paid by the lessee to obtain ownership of the collateral,

less any amount paid before the determination;

(ac) "pawnbroker" means a person who engages in the business of granting credit to individuals for personal, family or household purposes and who

(i) takes and perfects security interests in consumer goods by taking possession of them, or

(ii) purchases consumer goods under agreements or undertakings, express or implied, that the goods may be repurchased by the sellers;

(ad) "personal property" means goods, a document of title, chattel paper, a security, an instrument, money or an intangible;

(ae) "prescribed" means prescribed by or pursuant to the regulations;

(af) "prior security interest" means an interest created by or provided for under a valid security agreement or other transaction entered into before the coming into force of this Act that is a security interest within the meaning of this Act and to which this Act would have applied if it had been in force when the security agreement or other transaction was entered into;

(ag) "proceeds" means

(i) identifiable or traceable personal property that is derived directly or indirectly from any dealing with collateral or proceeds of collateral and in which the debtor acquires an interest,

(ii) an insurance or other payment that represents indemnity or compensation for loss of or damage to collateral or proceeds of collateral, or a right to such a payment, or

(iii) a payment made in total or partial discharge or redemption of chattel paper, a security, an instrument or an intangible;

(ah) "purchase" means taking by sale, lease, discount, assignment, negotiation, mortgage, pledge, lien, issue, reissue, gift or any other consensual transaction creating an interest in property;

(ai) "purchase money security interest" means

(i) a security interest taken in collateral to the extent that it secures all or part of the purchase price of the collateral,

(ii) a security interest taken in collateral 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 the rights,

(iii) the interest of a lessor of goods under a lease for a term of more than one year, or

(iv) the interest of a consignor who delivers goods to a consignee under a commercial consignment,

but does not include a transaction of sale by and lease back to the seller, and for the purpose of this definition, "purchase price" and "value" include interest, credit costs and other charges payable for the purchase or loan credit;

(aj) "receiver" includes a receiver-manager;

(ak) "Registrar" means the Registrar of the Personal Property Registry appointed pursuant to this Act;

(al) "Registry" means the Personal Property Registry established by this Act;

(am) "registry of deeds" means the office of a registrar of deeds appointed pursuant to the Registry Act;

(an) "sale of goods without a change of possession" means a sale of goods that is not accompanied by an immediate delivery and an actual, apparent and continued change of possession of the goods sold, but does not include a sale of goods in the ordinary course of business of the seller, and for the purpose of this definition, "sale" includes an assignment, transfer, conveyance, declaration of trust or any other agreement or transaction, not intended to secure payment or performance of an obligation, by which an interest in goods is conferred;

(ao) "secured party" means

(i) a person who has a security interest,

(ii) a person who holds a security interest for the benefit of another person, or

(iii) a trustee, if a security interest is embodied in a trust indenture;

(ap) "security" means a writing, whether or not in the form of a security certificate, that

(i) is recognized in the jurisdiction in which it is issued or dealt with as evidencing a share, participation or other interest in property or an enterprise, or that evidences an obligation of the issuer,

(ii) is one of a class or series or, by its terms, is divisable into classes or series of writings, and

(iii) in the ordinary course of business is transferred by

(A) delivery with the necessary endorsement, assignment or registration in the records of the issuer or of an agent of the issuer, or compliance with restrictions on transfer, or

(B) an entry in the records of a clearing agency,

but does not include a writing that provides for or creates a mortgage or charge in respect of an interest in land that is specifically identified in the writing;

(aq) "security agreement" means an agreement that creates or provides for a security interest and, where the context permits, includes

(i) an agreement that creates or provides for a prior security interest, and

(ii) a writing that evidences a security agreement;

(ar) "security interest" means

(i) an interest in personal property that secures payment or performance of an obligation, but does not include the interest of a seller who has shipped goods to a buyer under a negotiable bill of lading or its equivalent to the order of the seller or to the order of an agent of the seller, unless the parties have otherwise evidenced an intention to create or provide for a security interest in the goods, and

(ii) the interest of

(A) a consignor who delivers goods to a consignee under a commercial consignment,

(B) a lessor under a lease for a term of more than one year,

(C) a transferee under a transfer of an account or a transfer of chattel paper, or

(D) a buyer under a sale of goods without a change of possession,

that does not secure payment or performance of an obligation;

(as) "security with a clearing agency" means a security

(i) in the form of a security certificate

(A) in bearer form,

(B) endorsed in blank by an appropriate person, or

(C) registered in the name of the clearing agency or its nominee or custodian,

that is in the custody of the clearing agency, or

(ii) not in the form of a security certificate and that is registered or recorded in the records maintained by or on behalf of the issuer in the name of a clearing agency or its nominee or custodian;

(at) "specific goods" means goods identified and agreed on at the time a security agreement in respect of those goods is made;

(au) "trust indenture" means a deed, indenture or document, however designated, by the terms of which a person issues or guarantees or provides for the issue or guarantee of debt obligations secured by a security interest and in which another person is appointed as trustee for the holders of the debt obligations issued, guaranteed or provided for under it;

(av) "value" means any consideration sufficient to support a simple contract and includes an antecedent debt or liability, and "new value" means value other than an antecedent debt or liability. 1995-96, c. 13, s. 2.

Further interpretation

3 (1) For the purpose of this Act,

(a) a natural person knows or has knowledge when information is acquired by that person under circumstances in which a reasonable person would take cognizance of it;

(b) a partnership knows or has knowledge when information has come to the attention of one of the partners, or where the partnership is a limited partnership, one of the general partners, or a person having control or management of the partnership business under circumstances in which a reasonable person would take cognizance of it;

(c) a body corporate knows or has knowledge when information, in writing, has been delivered to the body corporates registered office or recognized agent appointed by the body corporate in accordance with the Corporations Registration Act or the Societies Act, or when information has come to the attention of

(i) a managing director or officer of the body corporate, or

(ii) a senior employee of the body corporate with responsibility for matters to which the information relates,

under circumstances in which a reasonable person would take cognizance of it;

(d) the members of an association know or have knowledge when information has come to the attention of

(i) a managing director or officer of the association,

(ii) a senior employee of the association with responsibility for matters to which the information relates, or

(iii) all members,

under circumstances in which a reasonable person would take cognizance of it; and

(e) a government knows or has knowledge when information has come to the attention of a senior employee of the government with responsibility for matters to which the information relates under circumstances in which a reasonable person would take cognizance of it.

(2) Except as otherwise provided in this Act, the determination as to whether goods are "consumer goods", "inventory" or "equipment" shall be made as of the time the security interest attaches.

(3) Proceeds are traceable whether or not there is a fiduciary relationship between the person who has a security interest in the proceeds as provided in Section 29 and the person who has rights in or has dealt with the proceeds.

(4) Where collateral is a security with a clearing agency, the transferee or secured party is deemed to have taken possession of the security when the appropriate entries have been made in the records of the clearing agency.

(5) This Act is to be interpreted and applied, in so far as the context permits, in a manner that promotes the inter-jurisdictional harmony of the law of personal property security in Canada.

(6) This Act binds Her Majesty in right of the Province. 1995-96, c. 13, s. 3.

Application of Act

4 (1) Subject to Section 5, this Act applies to

(a) every transaction that in substance creates a security interest, without regard to its form and without regard to the person who has title to the collateral; and

(b) without limiting the generality of clause (a), a chattel mortgage, conditional sale, fixed charge, floating charge, pledge, trust indenture, trust receipt, assignment, consignment, lease, trust or transfer of chattel paper where it secures payment or performance of an obligation.

(2) Subject to Sections 5 and 56, this Act applies to

(a) a commercial consignment;

(b) a lease for a term of more than one year;

(c) a transfer of an account or chattel paper; and

(d) a sale of goods without a change of possession,

that does not secure payment or performance of an obligation. 1995-96, c. 13, s. 4.

Act does not apply

5 Except as otherwise provided in this Act, this Act does not apply to

(a) a lien, charge or other interest given by rule of law or statute unless the statute provides that this Act applies;

(b) the creation or transfer of an interest or claim in or under a contract of annuity or policy of insurance except the transfer of a right to money or other value payable under a policy of insurance as indemnity or compensation for loss of or damage to collateral;

(c) the creation or transfer of an interest in present or future wages, salary, pay, commission or any other compensation for work or services, the assignment or transfer of which is prohibited by any statute or rule of law;

(d) the transfer of an unearned right to payment under a contract to a transferee who is to perform the transferors obligations under the contract;

(e) the creation or transfer of an interest in land including a lease;

(f) the creation or transfer of an interest in a right to payment that arises in connection with an interest in or a lease of land other than an interest in a right to payment evidenced by a security or an instrument;

(g) a sale of accounts, chattel paper or goods as part of a sale of the business out of which they arose unless the vendor remains in apparent control of the business after the sale;

(h) a transfer of accounts made solely to facilitate the collection of accounts for the transferor;

(i) the creation or transfer of a right to damages in tort;

(j) a mortgage or sale registered pursuant to the Canada Shipping Act (Canada);

(k) a security agreement governed by an Act of the Parliament of Canada that deals with the rights of parties to the agreement or the rights of third parties affected by a security interest created by the agreement, including any security agreement governed by Part VIII of the Bank Act (Canada). 1995-96, c. 13, s. 5.

Perfection of interest in goods or possessory interest

6 (1) Subject to this Act, the validity, perfection and effect of perfection or non-perfection of

(a) a security interest in goods; and

(b) a possessory security interest in a negotiable document of title, chattel paper, a security, an instrument and money,

are governed by the law of the jurisdiction where the collateral is situated when the security interest attaches.

(2) For the purpose of subsection (1), a security with a clearing agency is situated where the records of the clearing agency are kept.

(3) A security interest in goods perfected pursuant to the law of the jurisdiction in which the goods are situated, at the time the security interest attaches but before the goods are brought into the Province, continues perfected in the Province if it is perfected in the Province

(a) not later than sixty days after the goods are brought into the Province;

(b) not later than fifteen days after the secured party has knowledge that the goods have been brought into the Province; or

(c) before perfection ceases under the law of the jurisdiction in which the goods were situated when the security interest attached,

whichever is earliest.

(4) Notwithstanding subsection (3), a security interest in goods referred to in that subsection is subordinate to the interest of a buyer or lessee of the goods who acquires the interest without knowledge of the security interest and before it is perfected in the Province pursuant to Section 25 or 26.

(5) A security interest that is not perfected in accordance with subsection (3) may be otherwise perfected in the Province pursuant to this Act.

(6) Where a security interest referred to in subsection (1) is not perfected pursuant to the law of the jurisdiction in which the collateral was situated when the security interest attached and before the collateral was brought into the Province, it may be perfected pursuant to this Act. 1995-96, c. 13, s. 6.

Removal from Province

7 (1) Subject to Section 8, where the parties to a security agreement that creates a security interest in goods in one jurisdiction understand when the security interest attaches that the goods will be kept in another jurisdiction, the validity, perfection and effect of perfection or non-perfection of the security interest are determined by the law of the other jurisdiction if the goods are removed to the other jurisdiction, for purposes other than transportation through the other jurisdiction, within thirty days after the security interest attaches.

(2) Where the other jurisdiction referred to in subsection (1) is not the Province and the goods are later brought into the Province, the security interest in the goods is deemed to be a security interest to which subsection 6(3) applies if it was perfected pursuant to the law of the other jurisdiction to which the goods were removed. 1995-96, c. 13, s. 7.

Perfection of other interests

8 (1) For the purpose of this Section, a debtor is located

(a) at the place of business of the debtor, if any;

(b) at the chief executive office of the debtor, if the debtor has more than one place of business; and

(c) at the principal residence of the debtor, if the debtor has no place of business.

(2) The validity, perfection and effect of perfection or non-perfection of

(a) a security interest in an intangible;

(b) a security interest in goods that are of a type that are normally used in more than one jurisdiction, if the goods are equipment or are inventory leased or held for lease by the debtor to others; and

(c) a non-possessory security interest in a negotiable document of title, chattel paper, a security, an instrument or money,

are governed by the law, including the conflict of law rules, of the jurisdiction where the debtor is located when the security interest attaches.

(3) Where a debtor relocates to another jurisdiction or transfers an interest in the collateral to a person located in another jurisdiction, a security interest perfected pursuant to the law that is applicable under subsection (2) continues perfected in the Province if it is perfected in the other jurisdiction

(a) not later than sixty days after the debtor relocates or transfers an interest in the collateral to a person located in the other jurisdiction;

(b) not later than fifteen days after the secured party has knowledge that the debtor has relocated or transferred an interest in the collateral to a person located in the other jurisdiction; or

(c) before perfection ceases under the law of the first jurisdiction,

whichever is earliest.

(4) Where the law governing the perfection of a security interest under subsection (2) or (3) does not provide for public registration or recording of the security interest or of a notice relating to it, and where the collateral is not in the possession of the secured party, the security interest is subordinate to

(a) an interest in an account payable in the Province; and

(b) an interest in goods, a negotiable document of title, chattel paper, a security, an instrument, or money if the interest was acquired when the collateral was situated in the Province,

unless the security interest is perfected pursuant to this Act before the interest referred to in clause (a) or (b) arises.

(5) A security interest referred to in subsection (4) may be perfected pursuant to this Act.

(6) Notwithstanding Section 7 and subsection (2), the validity, perfection and effect of perfection or non-perfection of a security interest in minerals or in an account resulting from the sale of the minerals at the minehead or wellhead that

(a) is provided for in a security agreement executed before the minerals are extracted; and

(b) attaches to the minerals on extraction or attaches to an account on sale of the minerals,

are governed by the law of the jurisdiction in which the minehead or wellhead is located. 1995-96, c. 13, s. 8.

Applicable law

9 (1) Notwithstanding Sections 6, 7 and 8,

(a) procedural issues that relate to the enforcement of the rights of a secured party against collateral, other than intangibles, are governed by the law of the jurisdiction in which the collateral is located when the rights are exercised;

(b) procedural issues that relate to the enforcement of the rights of a secured party against intangibles are governed by the law of the forum; and

(c) substantive issues that relate to the enforcement of the rights of a secured party against collateral are governed by the proper law of the contract between the secured party and debtor.

(2) For the purpose of Sections 6, 7 and 8, a security interest shall be deemed to be perfected pursuant to the law of a jurisdiction if

(a) the secured party has complied with the law of that jurisdiction relating to the creation and continuance of a security interest; and

(b) the security interest has a status under the law of that jurisdiction in relation to the interests of other secured parties, buyers, creditors of the debtor and a trustee in bankruptcy of the debtor similar to the status of an equivalent security interest created and perfected pursuant to this Act. 1995-96, c. 13, s. 9.

Effect of security agreement

10 Except as otherwise provided in this or any other Act, a security agreement is effective according to its terms. 1995-96, c. 13, s. 10.

Enforceability against third party

11 (1) A security interest is enforceable against a third party only where

(a) the collateral is in the possession of the secured party or another person on the secured partys behalf; or

(b) the debtor has signed a security agreement that contains

(i) a description of the collateral by item or kind, or by reference to one or more of the following: "goods", "document of title", "chattel paper", "security", "instrument", "money" or "intangible",

(ii) a statement that a security interest is taken in all of the debtors present and after-acquired personal property, or

(iii) a statement that a security interest is taken in all of the debtors present and after-acquired personal property except specified items or kinds of personal property or except one or more of the following: "goods", "document of title", "chattel paper", "security", "instrument", "money" or "intangible".

(2) A secured party does not have possession of collateral for the purpose of clause (1)(a) if the collateral is in the apparent possession or control of the debtor or the debtors agent.

(3) A description is inadequate for the purpose of subclause (1)(b)(i) if it describes the collateral as consumer goods or equipment without further describing the item or kind of collateral but, where the personal property to be excluded from a description of collateral under subclause (1)(b)(iii) is the consumer goods of the debtor, the excluded property may be described simply as consumer goods.

(4) A description of collateral as inventory is adequate for the purpose of clause (1)(b) only while it is held by the debtor as inventory.

(5) A security interest in proceeds is enforceable against a third party, whether or not the security agreement contains a description of the proceeds. 1995-96, c. 13, s. 11.

Right of debtor to copy

12 Where a security agreement is in writing, the secured party shall deliver a copy of the security agreement to the debtor within ten days after its execution and, if the secured party fails to do so after a request by the debtor, the Court may, on application by the debtor, order the delivery of the copy to the debtor. 1995-96, c. 13, s. 12.

Time of attachment of security interest

13 (1) A security interest, including a security interest in the nature of a floating charge, attaches when

(a) value is given;

(b) the debtor has rights in the collateral; and

(c) except for the purpose of enforcing rights as between the parties to the security agreement, the security interest becomes enforceable within the meaning of Section 11.

(2) Notwithstanding subsection (1), where the parties have specifically agreed to postpone the time of attachment, the security interest attaches at the agreed time.

(3) For the purpose of clause (1)(b) and without limiting other rights, if any, that the debtor has in the goods, a lessee under a lease for a term of more than one year or a consignee under a commercial consignment has rights in the goods when the lessee or consignee obtains possession of them under the lease or consignment.

(4) For the purpose of clause (1)(b), a debtor has no rights in

(a) crops until they become growing crops;

(b) the young of animals until they are conceived;

(c) minerals until they are extracted; or

(d) trees, other than crops, until they are severed. 1995-96, c. 13, s. 13.

Security interest in after-acquired property

14 (1) Subject to Section 13 and subsection (2), a security agreement that provides for a security interest in after-acquired personal property attaches to that property in accordance with the terms of the agreement without any need for specific appropriation by the debtor.

(2) A security interest does not attach under an after-acquired property clause in a security agreement to after-acquired personal property that is

(a) crops that become growing crops more than one year after the security agreement has been entered into, except that a security interest in crops that is given in conjunction with a lease, agreement for sale or mortgage of land may attach, if the parties agree, to crops to be grown on the land concerned during the term of the lease, agreement for sale or mortgage; or

(b) consumer goods, other than an accession, unless the security interest is a purchase money security interest or a security interest in collateral obtained by the debtor as replacement for collateral described in the security agreement. 1995-96, c. 13, s. 14.

Future advances

15 (1) A security agreement may secure future advances.

(2) Unless otherwise agreed, an obligation owing to a debtor to make future advances is not binding on a secured party if

(a) a notice of judgment against the debtor has been registered in the Registry;

(b) the collateral in which the secured party has a security interest includes non-exempt exigible personal property or attachable debts of the debtor within the meaning of the Creditors Relief Act; and

(c) the secured party has knowledge of the registration of the notice of judgment before making the advances. 1995-96, c. 13, s. 15.

Application of contract law

16 Where a seller has a purchase money security interest in goods, the law relating to contracts of sale governs the sale and the sellers performance obligations with respect to the goods, including any disclaimer, limitation or modification of those obligations. 1995-96, c. 13, s. 16.

Construction of acceleration clause

17 Where a security agreement provides that a secured party may accelerate payment or performance when the secured party considers that the collateral is in jeopardy or that the secured party is insecure, the security agreement shall be construed to mean that the secured party has the right to do so only if the secured party in good faith believes and has commercially reasonable grounds to believe that the prospect of payment or performance is or is about to be impaired or that the collateral is or is about to be placed in jeopardy. 1995-96, c. 13, s. 17.

Duties and rights of secured party

18 (1) In this Section, "secured party" includes a receiver.

(2) A secured party shall use reasonable care in the custody and preservation of collateral in the secured partys possession and, unless otherwise agreed, in the case of chattel paper, a security or an instrument, reasonable care includes taking necessary steps to preserve rights against other persons.

(3) Unless otherwise agreed, where collateral is in the secured partys possession,

(a) reasonable expenses, including the cost of insurance and payment of taxes or other charges incurred in obtaining and maintaining possession of the collateral and in its preservation are chargeable to the debtor and are secured by the collateral;

(b) the risk of loss or damage, except if caused by the negligence of the secured party, is on the debtor to the extent of any deficiency in any insurance coverage;

(c) the secured party may hold as additional security any increase or profits, except money, resulting from the collateral;

(d) the secured party shall apply any increase or profits in the form of money resulting from the collateral, unless remitted to the debtor, immediately on its receipt in reduction of the obligation secured; and

(e) the secured party shall keep the collateral identifiable, but fungible collateral may be commingled.

(4) Subject to subsection (2), a secured party may use the collateral

(a) in the manner and to the extent provided in the security agreement;

(b) for the purpose of preserving the collateral or its value; or

(c) in accordance with an order of the Court. 1995-96, c. 13, s. 18.

Right to certain information

19 (1) The debtor, a creditor, a sheriff, a person with an interest in personal property of the debtor or an authorized representative of any of them may require a secured party, by a demand in writing, to send or make available the information or documentation referred to in subsection (3) to the person making the demand or, if the demand is made by the debtor, to any person at an address specified by the debtor.

(2) A demand made pursuant to subsection (1) shall contain an address for reply and may be delivered to the secured party