The Personal Property Securities Act 2009(“the PPSA”) is a Commonwealth Act for the taking, registration and enforcement of security over all kinds of property, except land. This new law impacts most businesses and requires registration to ensure that your business assets are protected from customers who have not paid you in full.
What the PPS legislation seeks to do is to ensure that the owner of assets – who is yet to be paid in full for those assets by their clients – is protected and to ensure that the owner’s rights are not subordinated to another, if the person holding the goods deals with the assets, or goes into liquidation.
The PPSA registration creates a central register where all such security interests are registered and available for third parties to review.
In order to obtain such protection from your clients, your standard/contract terms of conditions with your clients needs to allow for the following:
1. That your contract states that you retain ownership of your goods until full payment is received.
2. That your contract provides for you to register your interest on the PPSA register.
3. That you are not required to notify your client of the PPSA registration.
For those rare businesses that are paid upfront for the supply of goods, no action is required. However, if your business supplies goods on consignment or on terms, you should now ensure that your terms and conditions allow for your interest to be registered on the PPSA register. Otherwise, in a “disaster” scenario, you may have no rights with respect to your unpaid goods.
We recommend that if your business supplies goods to third parties on credit for example, that your standard contract/terms and conditions are reviewed to ensure that they are compliant with the PPSA legislation. In addition, that proper registration has occurred on the PPSA register to protect your business.