Some of the key new terms introduced under the PPSA in slightly more detail are as follows:

Grantor: is the person who grants a security interest.

Debtor: is the person who owes the obligation that a security interest is granted to secure.  

The debtor may also be the grantor, but need not be. Third-party security, such as upstream security granted by a subsidiary for money borrowed by a parent company in a corporate group, will often mean that the grantor (the subsidiary giving security) is different to the debtor (the parent company borrowing the money). 

Secured party: means the person owed the obligation secured by the security interest. The secured party is the creditor who holds a security interest. 

Collateral: is the fund of personal property over which security is granted to “back” performance of the obligations secured, usually the repayment of money borrowed 

Attachment: means a security interest coming into existence. 

Perfection: means a security interest being “advertised to the world” so that others can find it, by one of principally three prescribed ways:

(1) registration on the new PPS Register, or

(2) the secured party taking possession or

(3) control of the collateral.

In addition, some security interests can rely on automatic temporary perfection in certain circumstances – see paragraphs 12.8.1 and below of Chapter 12 (Perfection) for discussion of temporary perfection.

Perfected security interests attain strength against other interests in the same collateral because they have been advertised for others to either know or find out about them. Perfection will not, however, necessarily mean first-priority over the collateral.

Priority time: means the time from which a security interest is perfected, provided that the security interest remains continuously perfected. Secured parties use their priority time to compete against other security interests in the same collateral.

Purchase money security interests (PMSIs): means security interest(s) that secure an unpaid purchase price. PMSIs are security interests granted over property newly acquired to fund an advance of the purchase price. Another way to look at PMSIs is that they are acquisition charges. Many leases and sales by retention of title will be classic PMSIs.

Deemed security interests: means three types of transactions that are regulated as security interests under the PPSA even though they may not secure any obligations. These transactions are:

- transfers of accounts (an account is the new name for a receivable or book debt under the PPSA

- commercial consignments; and 

- PPS Leases, another new term under the PPSA, are leases of goods (only goods) for a term that exceeds two (2) years, where the two year period includes options to extend and holdover periods

Serial numbered property: means the following four classes of collateral:

1 aircraft, aircraft engines and helicopters

2 watercraft (ships and boats)

3 motor vehicles, which means (broadly) most vehicles with wheels. There is a definition of motor vehicle at paragraph 21.6.6 of Chapter 21 (The Extinguishment Rules); and

4 four types of intellectual property rights, being

(1) patents

(2) trade marks

(3) designs; and

(4) plant breeder’s rights, because IP Australia assigns a number to these interests

Circulating assets: are the collateral under circulating security interests (the equivalent of floating charges under the PPSA), and means either²:

(a) any collateral in respect of which a secured party gives the grantor express or implied authority to dispose free of the security interest, usually in the ordinary course of the grantor’s business. This is the equivalent of the floating charge trading power; or 

(b) any of the following six (6) classes of collateral, which will be deemed (taken) to be circulating assets unless the secured party takes control over them (see paragraphs 28.5.10 to 28.5.15 of Chapter 28 (Circulating Security Interests (Floating Charges)) for what control here means):

1  accounts arising in the ordinary course of business, but not in respect of security interests over accounts that take the form of transfers (outright assignments) of accounts³

2  accounts that are proceeds of inventory (sales)

3  inventory itself

4  ADI accounts (current accounts, not term deposits), but not where the bank (ADI) holds a registered security interest over an ADI account held with it, and the registration nominates that the ADI has control over the ADI account, even if the ADI account is a current account⁴

5  currency

6  negotiable instruments

Proceeds: including all identifiable or traceable personal property in which the grantor has an interest and which are derived directly or indirectly from a dealing with original collateral or a dealing with proceeds of the original collateral⁵ – proceeds include “proceeds of proceeds”⁶.