- 6.1 Security interests
- 6.2 Exclusion: set-off, combination of bank accounts and netting arrangements
- 6.3 Exclusion: quistclose and turnover trusts
- 6.4 Exclusion: general law and statutory liens
- 6.5 Exclusion: interests in personal property that arise by operation of the general law
- 6.6 Exclusion: pawnbrokers and assignments of contractual position (novations)
- 6.7 Summary of security interest transactions (1) - transactions regulated as security interests under the PPSA
- 6.8 Summary of security interest transactions (2) - transactions expressly excluded from regulation under the PPSA
- 6.9 Summary of security interest transactions (3) - transactions that fall outside the definition of security interest
- 6.10 Summary of security interest transactions (4) - transactions to which it is unclear whether the PPSA applies
Summary table 3 - transactions expressly excluded from regulation under the PPSA
| Transaction | Secures an obligation? | Security interest under PPSA? |
| Exclusivity agreement | Unlikely but possible |
Very unlikely, but depends on content.
No interest granted in personal property, ie, no collateral. |
| Guarantees | Yes |
No.
No interest granted in personal property, ie, no collateral. |
| Indemnities | Yes | No.
No interest granted in personal property, ie, no collateral. |
|
Letters of comfort - strong and soft |
Possibly | Very unlikely, but depends on content. No interest granted in personal property, ie, no collateral. |
| Marshalling rights | Yes |
Very unlikely where marshalling rights arise by operation of law – PPSA section 8(1)(c). Possibly if marshalling rights arise by virtue of express contractual agreement – PPSA section 12(1). Marshalling rights usually arise by operation of law, not by agreement between the parties. Marshalling operates by way of subrogation, so see also subrogation further below in the table. Where a first-ranking secured party has realised or exhausted a common fund of collateral (“common” in the sense of there also being a junior-ranking security interest over the collateral), marshalling allows junior-ranking secured parties to subrogate to other security interests held by the first-ranking secured party (a so-called “double mortgagee” because two funds of collateral are held) who exhausted the common fund of collateral to the detriment of junior-ranking secured parties, and which (other) security interests are not needed by the first-ranking secured party to satisfy obligations owed to them. |
| Restraint of trade agreements | Possibly | Very unlikely, but depends on content. No interest granted in personal property, ie, no collateral. |
| Transaction | Secures an obligation? | Security interest under PPSA? |
| Subrogation rights | Possibly |
Very unlikely where subrogation rights arise by operation of law – PPSA section 8(1)(c). Possibly, if subrogation rights arise by virtue of express contractual agreement – PPSA section 12(1). Subrogation most commonly arises by operation of law, rather than by express agreement. Subrogation rights which arise by operation of law are very unlikely to be security interests, because they are not consensually agreed between the parties – section 8(1)(c). |
|
Trusts - implied or resulting trusts |
Unclear |
Very unlikely, given that implied and resulting trusts arise by operation of law – PPSA section 8(1)(c) |
|
Trusts - constructive |
Unclear |
Very unlikely, given that constructive trusts arise by operation of section 8(1)(c) |
