This document is an assignment of chattel paper clause. It is designed to be inserted into a loan agreement. The defined terms in this clause have the same meaning as those in the precedent called “Basic loan agreement”.
The concept of chattel paper is relatively a new one to Australia and receives prominence in the Personal Property Securities Act 2009 (Cth) (PPSA).
Subject to certain exclusions listed in the definition of chattel paper in the PPSA, chattel paper is considered to be writing that evidences one or more of the following:
- a security interest in specific goods;
- a lease of specific goods; or
- a security interest in specific intellectual property or a specific intellectual property licence.
Leases of goods, hire purchase agreements and goods mortgages may all be examples of chattel paper.
It is not within the scope of this introductory note to explain the complexities of the PPSA and how it interacts with the concept of chattel paper. It is assumed that the user of this precedent will have understood the implication of the interactions between chattel paper, the PPSA and how these rights can be assigned.
Assigning rights in chattel paper
An assignment is an agreement that transfers to a third party one party’s rights in chattel paper but not its obligation or liabilities.
When advising a party who wishes to assign their rights to a third party, it is important to:
- have a clear understanding of the laws relating to assignment; and
- consider whether there are any restrictions on the rights to be assigned.
Consideration is not necessary in the case of assignment of chattel paper. If there is no consideration, the instrument recording the assignment will need to be a deed in order to ensure the assignor’s undertakings are enforceable.
This precedent sets out simple assignment of chattel paper clauses, including PPSA provisions.
- Basic loan agreement
- Guarantee of payment of loan
- General security deed
- Amendment and restatement agreement
- Real property mortgage
- Deed of priority
- Forbearance of debt agreement
- Deed of assignment of debt
- Loan agreement checklist
This document has been authored for Lexis Nexis by Elise Margow, Principal, Legally Speaking.
This document is prepared with the assistance of Specialist Editors Geoff Geha, Partner, Clayton Utz and Karen Lee, Principal and Consultant, Legal Know-How.