Chattel Mortgages and Substitutes Therefor in Latin America

Abstract

THE SUBJECT OF SECURITY TRANSACTIONS in personal property is one which has recently been receiving much attention in the United States. Article 9 of the proposed Uniform Commercial Code represents an attempt to codify many divergent concepts which have developed in our states. Exhaustive commentaries on the subject were published with the official draft of' the Code,' and in January 1954 there appeared a two-volume study of the proposed text.2 The importance of such transactions to expanding industrial economies is apparent. Most of the countries of Latin America are in the process of hurried industrialization and are increasing their use of this type of transaction to expand sources of credit and promote production. Blessing or not, the era of installment selling seems to be about to descend in full force upon our consumer friends to the South. In addition, other types of secured transactions such as inventory and accounts receivable financing, factoring, agricultural commodity loans, loans secured by investment securities, warehouse receipts, etc., will become more important with increased industrial and commercial development. This paper will attempt to point out that the legal framework upon which this credit structure will be based in Latin America is different from that which was developed in Anglo-American law. The scope of the pledge, which has a limited function in our law, is being expanded to serve as the principal form of secured transaction in personalty. In a sense, this development, although later in time, is a parallel development to the expansion in the common law of the use of the chattel mortgage. The traditional pledge under both the common law and the civil law