Chapter 26
Accession, Processing and Commingling of Goods
26.5 Processing, comingling and manufacture of goods
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26.5.1

Manufacturing, processing or comingling (the PPSA treats them the same way because they all involve goods losing their identity into a product or mass) create special issues. There is no alternative but to somehow cut the cake between the stakeholders in the product or mass in as fair a way as possible.

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26.5.2

The PPSA provides that security interests in goods that lose their identity into a new product or mass continue in the product or mass1. Perfected and unperfected security interests alike continue into the product or mass2. Re- perfection does not appear to be required against the product or mass3.

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26.5.3

Two issues then arise. First, priority contests ensue between various security interests over different goods that continue into a product or mass. This is the easy point. Second, the more difficult point is the relationship between security interests that continue into the product or mass, and existing future property security interests granted by the manufacturer of the product that attach to the product under manufacture or once created, and which may have a priority time that is before any of the security interests over goods that are processed or comingled into the product or mass.

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26.5.4

These two issues are discussed in turn in the following sections.

Notes:

1 PPSA section 99. (link)

2 PPSA section 102 generally. (link)

3 PPSA section 100. (link)

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