The Interface Between Sales Law and Secured Transactions Law

Abstract

Problems of interaction frequently arise when two bodies of law based on fundamentally different concepts come into contact. Prior to the reform of personal property security law, there was a high degree of compatibility between sales law and secured transactions law since both depended heavily on traditional property law principles. There is not the same degree of compatibility between sales law and personal property security legislation. The PPSA discards much of the 19th century thinking on secured transactions law and diminishes the significance of title. There are fewer problems of interaction between sales law and secured transactions law in the United States because the Uniform Commercial Code (“UCC”) revised both bodies of law at the same time and this made it possible to coordinate them to a much greater extent. Although a sales law reform project in Canada proposed the reform of sales law along the same line as in the United States, this project died on the vine due to lack of support. The challenge for the future is to achieve through non-legislative means some measure of coordination between two statutes that employ strikingly different foundational principles. This article examines four basic questions that arise as a result of this lack of compatibility, namely: What is a conditional sale? What is reservation of a right of disposal? What is a right to sell? What is a consignment?