Module 6

Priority, default and enforcement: who is paid first, purchase money security, buyers, proceeds, insolvency and how a secured party enforces

Everything that came before in this course leads to the moment the debtor cannot pay. Then several people turn up, all saying that the same stock or machinery is theirs: the bank that lent against the stock, the supplier that sold it on credit and says it never gave up ownership, the buyer who paid and took delivery, the creditor who obtained a judgment and the trustee in insolvency. The law has to say who comes first. The rules are simple to state and hard to apply, and they decide which of several honest parties loses money. This module sets out the ranking rules, the special place of the supplier who finances the purchase of the goods, the position of buyers and proceeds, the effect of insolvency, and what the winner may do to enforce.

General education on commercial law and secured transactions, using invented businesses, people and figures. It states common principles in simplified form and does not describe any one country’s law, which differs and changes; rules on sale, security, registration and priority are strict and local. It is not legal advice. Consult a qualified lawyer in the place that matters.