Transplanted Legal Controversies: Buyer Status Under Secured Transactions Law

Abstract

Article 9 of the Uniform Commercial Code was transplanted into Canada as the Personal Property Security Act (PPSA) , and then a subsequently re-transplanted into New Zealand and Australia. The secured transactions regimes in all four of these countries contain an ordinary course buyer rule that permits a buyer to acquire goods free from a security interest granted by the seller. In all four countries, the same legal controversy has arisen. It concerns the point in time that a person acquires the status of a buyer so as to be able to invoke the ordinary buyer rule. The statutes are silent on this issue, and in each of the four countries the courts were asked to resolve the matter. This reveals some interesting aspects of legal transplants. The transplantation of a rule may result in the transplantation of a legal controversies that arise because of gaps and ambiguities in the transplanted rule. This raises four questions. The first concerns the source of law that will be used to fill if the gaps. The second concerns the role of courts in adapting and changing the legal principles in other areas of law in order to create a proper fit. The third concerns the use and persuasiveness of judicial decisions from other countries. The fourth is an inquiry as to why the drafters did not seek to legislatively resolve the issue instead of leaving it to be litigated afresh in the importing jurisdiction.