Default Rules in the Absence of an Agreement

Abstract

Abstract This chapter examines the default rules in English law with respect to the extent to which a holder of security interest or a title-based interest can assert a proprietary claim to a new or derived asset in cases where the agreement is silent as to such asset. It asks whether one who holds the proprietary interest in an asset can automatically assert rights in derived assets, particularly proceeds and fruits. The chapter first considers the ‘principle of substitutions and accretions’ in Buhr v Barclays Bank before discussing the question of whether a secured creditor has, by virtue of its interest, an automatic right to accretions, substitutes and fruits. It shows that there is no general principle in English law whereby security interests extend automatically to substitutes. In relation to fruits, the claims of secured creditors or holders of title-based interests depend primarily on their right to possess.