Security Interests in Negotiable and Quasi-negotiable Collateral

• Author: Ronald C.C. Cuming/Catherine Walsh/Roderick J. Wood
• Profession: University of Saskatchewan, College of Law/McGill University, Faculty of Law/University of Alberta, Faculty of Law
• Pages: 380-394

CHAP TER 9

SECURITY INTERESTS

IN NEGOTIABLE AND

QUASINEGOTIABLE

COLLATER AL

A. INTRODUCTION

All type s of personal property (other than t he few expressly excluded

by the Act1) can be given as collateral under a sec urity agreement. This

includes high ly negotiable proper ty, such as negotiable instr uments

and money. Conceptually and functionally, this creates few problems

and is an important feature of modern business f‌in ancing. In addition,

it is possible to perfect a secur ity interest in negotiable propert y, such

as money, negotiable instrument s and securities, a nd quasi-negot iable

property, such as documents of title and chattel paper, in any one of the

three ways avail able for security interests i n other types of coll ateral.

However, it is not feasible to apply the same priority rules to security

interests in the se types of property that are applicable to most other

types. It is un acceptable to require a tran sferee of negotiable property

to obtain a search result from the registr y or assume the ri sk of being

subject to a temporarily perfected secur ity interest when acquiring an

interest in the property t hrough negotiation. The PPSA recognizes th is

through a special set of priority rules de signed to avoid disruption in

traditional patterns of dealing with these typ es of property.

1 PPSA (A, BC, M, NB, O, PEI, S) s. 4; (NWT, Nu, Y) s. 3; (NL, NS) s. 5.

380