cautionary obl Flashcards
what is a security
any right which a cred may hold for ensuring payment or satisfaction of his debt distinct from and in addition to his right of action and execution agaistn the debtor latters personal obl
the accessory nature of security
parasitic upon the obligation secured debt can exist without security
best fertilizers of Arizona v burns
the note us the cow and the motgage the tail. the cow can survive without the tail but the the tail cannot survive without the cow.
cautionary obligation
Cautionry is an accessory obligation or engagement as surety for another, that the principal obligant shall pay the debt or perform the act for which he has engaged, otherwise the cautioner shall pay the debt or fulfil the obligation
Caution (noun); cautionry (noun); cautionary (adjective).
A owes money to B (under what area of law?), and C guarantees to B that debt will be paid. C is cautioner (guarantor). English term: “surety/ship.” A is principal obligant (debtor). B is the creditor.
The creditor B ends up with two personal rights.
One against the principal obligant, A (the obligation owed by A to B is the obligation secured).
B’s other personal right is against the cautioner, C (this obligation owed by C to A is accessory on the principal obligation).
CREDITOR HAS A RIGHT AGAINST THE DEBTOR POTENTIALLY TWO DEBTORS AVOID USING THAT TERMS PO INTEAD
EXAMPLES OF CAUTIONARY OBLS
By director/shareholders of small company
. (2) Family.
(3) Parent company for subsidiary: “downstream”.
(4) Subsidiary company for parent: “upstream”.
(5) Subsidiary company for subsidiary: “cross-stream”. (6) Bank for customer: bank will charge premium.
(7) Insurance company for person appointed by court as eg executor-dative.
SMITH V BANK OF SCOTLAND
THIRD PARTY PLEDGE CAUTIONARY OBLS BUISNESS OPERATED BY SMITH GUARENTEE A COMPANY TO BE THE OWNER AND THE WIFE AGREE
to guarantee building( mortgage over co-owned house so NEED WIFE AGREEMENT
CAN CAUTIONER SUE PRINCIPLE OBL
can sue princ obl for amount due but not thtorugh law of contract or promise
cautioner obl is to never to more that what is owed by the principle obl
the cautioner may cap liability further debt up until a certain time
limited liablity in small company shareholders fully paid shared serp personality tying shareholders personally
Hewitt v william
cautionary obl
if a third party pledge certin principles of cautionary obl apply to 3rd party pledge = DUTY OF GOODFAITH
QUASI CAUTION
Partners for their firm (see your lectures on partnership law). (2) Endorsers of negotiable instrument
CAUTION DISTINGUISH FROM OTHER THINGS
- “Guarantee” also means express contractual warranty eg of quality of goods.
(2) Representation as to creditworthiness. Eg bank reference. If negligent may give rise to liability in delict. (Cf Hedley Byrne & Co v Heller [1964] AC 465.)
(3) Letters of comfort. Kleinwort Benson v Malaysian Mining Corp [1989] 1 All ER 785.
4) Indemnity. This term sometimes used to mean caution. But strictly means obligation by X to compensate Y for any liability incurred by Y of certain defined type, eg debt to Z. Thus ultimate liability falls on X, but Z has no direct claims against X. Also called “obligation to free and relieve.”
IMPORPER CAUTION
cautioner and principal obligant purport to bind themselves as joint borrowers, but the intention differs
DOES NOT EXPRESSLY STATE LOOKS LOEM THE CAUTIONER MAY HAVE ONE. CRDITOR KNOWS THAT THEY ARE A CAUTIONER
PROPER CAUTION
ere true situation is stated – the cautioner is explicitly bound as cautioner for a specific debtor
caution gives the cautioner the benefit of discussion and division historically – reformed by Mercantile Law Amendment (Scotland) Act 1856. Improper caution does not have those benefits.
What is discussion and division?
Division and discussion (if proper cautionry) o Division: a co-cautioner is only entitled to a pro rata share of debt and can only be asked to pay if all cautioners are asked to pay o Discussion: the cautioner only has to pay when the creditor has taken all reasonable steps to enforce the debt against the principal obligant. This is only available if contracted for: Mercantile Law Amendment (Scotland) Act 1856, s 8. o Both can be supplanted by agreement.
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Now, generally if the debt is not paid the creditor can rely on the principal obligant and the cautioner to share joint and several liability
JOINT AND SEVERAL LIABILITY
EXTERNAL ASPECT THEY CHOOSE WHO TO SUE
there are two focuses
the liability that the debtors own and the liability between the debtors
INTERNAL PERSPECTIVE sue cautioner FIRST then CUTIONER HAS right of relief against the PO
EXTERNAL PERPECTIVE- THEY CHOOSE WHO TO SUE
EXAMPLE OF CAUTIONERS ESCAPE LIABILITY
C= CRED
X= CAUTIONER
D= PO
if C dupes D then C liable under validity of contractual NO contractual relationship of D so X can excape liability
c induces X to enter the cautionary obl. c misrep the pos but X knows real pos = NOT INDUCED AND IS BOUND
ROYAL BANK OF SCOT V RANKIN
2 CAUTIONERS.1 escapes liability as the PO was misrep they did not have RELEVANT LEVEL OF K OWLEDGE TO BE BOUND but THE OTHER STILL BOUND AS RELEVANT LEVEL OF KNOWLEGDE
cration of cautionary obls
writing not required s,1/2
rowa
unless gratuitous not granted in the course oif buinsess but even if writing is requored and not produced a cred who lends can rely on personal bar againt the cautionwer
essential validity of cautionary obls
The usual rules of essential validity for constitution of voluntary obligations apply. Remember the key relationship is between the creditor and the cautioner. So remember the usual grounds of challenge that apply to transactions (see your notes from contract law). The analysis of the relationship between creditor and cautioner is important because the cautioner owes an obligation to the credit
ROB V RANKIN
ADEBTOR PO
BCRED
CCAUTIONER
b INDICES c TO ENTER CAUTIONARY OBLS
INVALID IF NOT ENOUGH KNOWLEGDE
B MISREP POS TO C BUT C KNOWS REAL POS
ROB V RANKIN
ADEBTOR PO
BCRED
CCAUTIONER
b INDICES c TO ENTER CAUTIONARY OBLS
INVALID IF NOT ENOUGH KNOWLEGDE
B MISREP POS TO C BUT C KNOWS REAL POS
C gives cautionary obligation to B without awareness of A financial pos (thinking A solvent)
-still held liable if C presumed no duty on B to disclosure
as above but c ASKED ABOUT A’s pos= if asked then A has duty to disclose
AS above BUT B becomes aware that C completely misunderstands As transactions
ROYAL Bank v greenshields
B becomes aware that C completely misunderstands As transactions
lord clyde cred becomes aware that cautioner does not know what is going on then cred has to let them know
cred has two personal rights
no relationship in law of obls 3rd party dupes into
contract doesn’t matter- cautioner normally offered PO.
PO had little insentive to tell the truth
young v clysdale bank
A claims finance are fine anf C grants cautionin fvour of B
Bank lending has to be disclosed up until mid 1920sin England things have changed
Barclays bsnk v obrain
husband and wife sign a mortgage to secure husbands debts for business
wife on signed relying on H assurances mortgage enforced w tries escape liability
UNDUE INFLUENCE IN A CASE LIKE THIS MAY ARISE. WHERE ONE PARTY IS PRESUMMED TO SIGN OR CONSTRUCTIVE SACTION BANK PUT A NOTICE COAUTIONER HAS TO TAKE INDEPENPENDANT
IF NO INDEPENDANT ADVICE = STUCK DOWN
SMITH V BANK OF SCOT
L. JAUNCY
Wanted to dissent but checked to no cannot intead
L.clyde
relationship between PO and cautioner is such that cautioner needs independent advice.
if fails then it is set aside as a breach of goodfaith PO = duping = actionable wrong
Actionable wrong
misrep princ obl dup = set aside
and not asking then to
royal bank of scot v wilson
live next door to eachother std security requested because business concerned. there was w was an all sums secured by security WIFE secures business for husband
HELD NO ACTIONABLE WRONG SHE HAD INTEREST IN BUINESS. ONLY GRAT INTEREST ARE STUCK DOWN
bank of scot v cooper
no letter in file to show that bank of scot could prove tht co owner was given independent advice thus SECURTIY STRUCK DOWN LECTURE VIEW IN PREACTICE DO NOT HAVE TO KEEP LETTERA FOR MORE THAN 6 YEARS PROBS THROWN AWAY
Can the cautioner demonstrate that the debtor had committed an actionable wirng against the cautioner AND as cautioner they had relied on said wrong
which actionable wriongs are covered
smith relationship not fully formed actionable wrong did grant gart did cred warn to get independent advice if you FAILE ONE = NO CLAIM
royal bank of scot v etridge
where the house house of lords set down detailed compulsory guidelines for the cred to fllow to ensure that it was satisfied
proformal agreement cautionar has 2 options sue the bank strike down OR
sue the sol as the advice wass not good eniugb to explain consequenses
liability in solidium Joint and several
Principal obligant and cautioner liable in solidum. So it is joint and several liability (discussed earlier – meaning the creditor can claim whole sum from either). Must be default, but creditor need not first seek to enforce against principal obligant. The cautioner has a right of relief against the principal obligant, if the cautioner has to pay the creditor.
Extent of liability: General
(1) Caution for a fixed debt (eg £10,000 loan). Cautioner’s liability can never increase. (2) Caution for a fluctuating amount (eg overdraft). This is a continuing guarantee and (unless otherwise agreed) may be terminated by notice to creditor, which fixes liability at sum then due.
Example (combined with rule in Clayton’s Case): Anne is cautioner for overdraft of Beta Ltd. When overdraft stands at £25,000 Anne terminates. Thereafter credits to account of £12,000 and debits of £10,000. Anne now liable only for £13,000. (The £10,000 of debits are post-termination loans
Extent of liability: Liability ceilings
Caution is often limited to defined ceiling: eg caution for overdraft but maximum liability £60,000.
This can lead to interpretation problems. Suppose principal debtor sequestrated. Debt £100,000. Dividend (which is the amount paid out of the debtor’s estate on sequestration) 30% = £30,000. Then:
1) Is the £30,000 to be ascribed to guaranteed part of debt? In that case cautioner now liable only for £60,000 minus £30,000 = £30,000.
The creditor gets the £30,000 dividend plus the amount due from the cautioner, a maximum of £60,000
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2) Or is the £30,000 to be ascribed to non-guaranteed part of debt? In that case cautioner liable for full £60,000.
The creditor in this case gets the £30,000 dividend PLUS the amount due from the cautioner – recovering £90,000 in total.
3) Or is the £30,000 to be ascribed rateably to both? That would mean: £12,000 to non-guaranteed part and £18,000 to guaranteed part. In that case cautioner liable for £60,000 minus £18,000 = £42,000.
The creditor in this case gets the £30,000 dividend PLUS the amount due from the cautioner after rateable apportionment. This means the creditor gets £72,000 in total.
can cautioner be held resp for full amount owed by PO
if cautioner applied a cap then no.over draft fluctuated can be increased the cautioner mey not want to be held resp so may apply a cap to prevent them from being held liable for full debt of cautioner
the cap can either be a PROP if the debt or a FIXED SUM
CONTRACT WILL STATE EXPLICITLY
example
b account = 0k crd
account = 5000k debit
A puts guarantee 5k and put notice to cap
B= 1k into account b= 0.5k out B = 0.5 k out b=1.5 in b=1 k out b =1k out b = 0.5 in what is bs liabilty
- earlies credt meets earliest debt
2.this means any money that b receives into their account goes to pay off the debt pre cap. - so total credit going in to account in 3 k
- this will pay of 3k of debt pre cap
pre cap debt= 2 k- which still has a guarantee - debt after cap remains at 3k
Harvie vtrs v bank of scotlad
defendant rules in interpresting if flux = prop
where as fixed will be cap
the interpretation is dependent onb the wording of the bond a clause that leads to 2 is called an ultimate loss caclause
The creditor in this case gets the £30,000 dividend PLUS the amount due from the cautioner – recovering £90,000 in tota
seems to be wbaf the law presumes
:The creditor in this case gets the £30,000 dividend PLUS the amount due from the cautioner after rateable apportionment. This means the creditor gets £72,000 in total.
what rights does a cautioner have
Right of relief – the right to get payment from the principal obligant (but what happens in bankruptcy? See below)
If cautioner has paid, creditor must assign the right to enforce the debt and any existing securities to the cautioner: beneficium cedendarum actionum.
Division and discussion (if proper cautionry)
Division: a co-cautioner is only entitled to a pro rata share of debt and can only be asked to pay if all creditors asked to pay o Discussion: the cautioner only had to pay when the creditor has taken all reasonable steps to enforce the debt against the principal obligant. This is only available if contracted for: Mercantile law Amendment (Scotland) Act 1856, s 8. o Both can be supplanted by agreement. (see earlier for discussion)
Cautioner has right to rank in bankruptcy of principal obligant (if the cautioner has paid the debt in full) but the cautioner cannot rank in the bankruptcy of the principal obligant if the creditor has ranked for the debt in the bankruptcy (as a result of the rule prohibiting double ranking). The rule on bankruptcy is complicated and warrants special consideration
discharge of cautioner by agreement of credit
termination of cautionary obls
The creditor can agree to discharge the cautione
extinction of the principal obl
termination of cautionary obls
When the principal debt is extinguishe
passage of time
material alteration
termination of cautionary obls
Any alteration of loan terms, without consent of cautioner, implies discharge of cautioner, even if not prejudicial. However, note that further advances may not be covered. See Bank of Scotland v MacLeod 1986 SLT 504 overdraft = 10k day 1 extend to 20k cautioner argued material charge still caught by cautionary obl caution
napier v crosbie
termination of cautionary obls
lend you more money = terminate cautionary obl material difference
prejudicial conduct of cred
termination of cautionary obls
Giving time
Where creditor does not demand payment when it falls due (which serves to impact on the cautioner’s right of relief).
Where the creditor gives up securities
If the creditor voluntarily discharges a security the cautioner is released (to the extent of the security released).
Discharge of a co-cautioner
If there are multiple cautioners discharging one can lead to release of the other cautioners.
prescritption
termination of cautionary obls
5 years from the date that the obligation becomes enforceable.
This may be 5 years from the date of demand: Royal Bank of Scotland v Brown 1982 SC 89
bankcrupcy
termination of cautionary obls
distriction between real and personal rights
Bankruptcy: the rule against “double ranking”
Alf owes Bert £60,000. Alf is sequestrated. Loan guaranteed by Carol to maximum of £40,000. Bert recovers £40,000 from her. Bert still ranks in sequestration for full original debt. Suppose dividend 20%: Bert paid £12,000 by trustee.
Carol has right of relief ie is creditor of Alf to extent of £40,000. Can she rank for this?
Bankruptcy: the rule against “double ranking”
No. This debt already “ranked for” by Bert (as part of the £60,000). If Carol could rank for it, that would be unfair to other creditors, since more than 20% would be paid on the original debt of £60,000.
Alf owes Bert £60,000. Alf is sequestrated.
Bert holds standard security over property worth £40,000.
Property sold, Bert takes £40,000, and ranks as unsecured creditor for shortfall, ie £20,000. Suppose trustee in sequestration pays dividend of 20%, Bert gets £4,000. Total recovery: £44,000
A has a std sec over the house with B for 40k
but A debt is greater than the std sec.
so B recovers part of the sdebt by selling the house
then becomes unsec cred for the rest.
trustee in seq= 20% of 20k = 4k
b total recovery = 44k
Alf owes Bert £60,000. Alf is sequestrated. Loan guaranteed by Carol to maximum of £40,000. . Suppose dividend 20%: Bert paid £12,000 by trustee. . (NB creditor cannot recover more than 100%.)
a-b 60k. Bert recovers £40,000 from her as he rank first. Bert still ranks in sequestration for full original debt 20% of 60k= 12k 40k+12 Total recovery: £52,000
the mackinnon case
IF CAUTIONER PAY CRED FIRST THENTHEY GET FIRST RIGHT OF RELIEF AGAINST THE PO
IF THEY PAY AFTER THE INSOLVENSY PROCESS BEGAN THEN CRED CAN CLAIM RIGHT OF RELIF FROM CAUTIONER
IF B CLAIMED AGAINST A COULD PAY B THEN C, WOULD LOOSE THE RIGHT TO RELIEF THROUGH DOUBLE RANK RULE
Suppose that Carol paid the £40,000 before Alf’s sequestration.
Then Bert ranks only for £20,000.
Total recovery £40,000 + £4,000 = £44,000.
Carol ranks for £40,000.
Recovers £8,000.
Her total loss only £40,000 minus £8,000 = £32,000. So in her interest to pay early: Mackinnon’s Trs v Bank of Scotland 1915 SC 411
Right of relief v. rarely has much value
principal obl unable to pay
rule against double ranking
PO has gone insolvent. there was an agreement where cautioner agrees to pay 200
Po insolvensy means cred get div of 50p to £1
the pop owes crd 1k
capped cautionary obl example
the cred get 500 from 50p to £1 div
the cautioner agreed to oay 200 so they can retrieve that
overall cred gets 700
in theory cautioner has right of relief but doube ranking = not valid
owes cred 1k
po goes insovent. cautioner guarentees a 1/5 of total debt
div set at 50p to £1 debt
goes insolvent with prop cap
cautioner = gurentee 1/5 of debt
PO will contribute 500 as div set at 50 p to a £1
1/5 of total debt =
1/5 of 500 to find out what cautioner contributes
= 100
cred gets a total of 600
bank of scot v Hutchinson main
Mere obligation to grant security is not security. Must be constituted as a real right. This usually means possession or registration
distinguish proper from improper asset sec
(1) proper from (2) improper asset security (sometimes referred to as quasi-securities). In (1) there are two real rights in the thing: the real right of ownership, which the debtor has, and the (subordinate) real right of security, which the creditor has (jus in re aliena). In (2) there is only one real right, ownership, which is vested in the creditor. The debtor has no real right, but has personal right to be made owner when debt is paid. Debtor may be regarded is owner in functional sense, but in law creditor is owner. Ownership is being used as security
property of another
a right in sec is over property belonging to someone other than cred
personal liability real laibilty
the debtors liability is distinct fromliaability of asset
cannot be pushed cannot be passed onto someone else remaining until exec pays with property
transfer of cres right= assignation of debt
transfer of debtors right transfer of ownership
changes of debtors right is not prevented by excsitance of sec and does not affect cred rights NEITHER PERSONAL/REAL
accessory rights
parasitic rights
secures obligatipon
1970 act secures debts and obls ad factuem praestandum
remedy to selling the asset and get money out disconnection with money value for breach of obl
real rights
right to sell asset pact to sell goes beyond that attaches to cred. can get paid before other cred
cannot have secret real right PUBLICITY PRINCIPLE seecutrity of land not crwated by debtor acceptance but by REG
alabatown
accessory rights and the 2 year missives
dependent can personal right secured. security have no existance if NO DEBT
warner v mason
rela right credit over property std sec can say no if security value reduced = ancillary pursuers to protect investment
movable and heritable sec
taxonomies
corpeal movables= lien pledge land lords hypothec
heritable property- std sec( includes long lease)
incoperal movable- no right in sec as assignation required
posessory and non posessory
taxonomies
possesioory= pledge and lien (car don’t pay garage excerciese lien and take pos until debt paid)
non possessiory- hypothecs includes std sec
express, voluntary and judicial sec
taxonomies express- voluntary consensual tacit- lega; arising out of operation of law steps in provides application to the court of any cred cease asset judicial-dil= inhibiton and adjudication attachment arrestement
ranking floating charge vs std sec
you can have one or more security over property (eg floating charge and std sec)
leads to Q of priority ranking who gets what when asset is sold
gfloating charge is a NON POSSESORY HERITABLE MOVANLE over everything it owns
express sec not normal sec can be real right as soon as it goes into liquidation to have floating charge
oteher examples = double glazinfg finance
std sec double glasxing finance anf bank std secBANK PARID FIRST
POST OOSENED RANKING
ranking
more than one sec is possible where one sec is a non possessory
in this case either post posed ranking or paripasi ranking will apply
example 1 ranking
Example: Fiona grants standard security over her house to Gavin. Later grants one to Harriet. Fiona becomes insolvent. Gavin sells the house. It fetches £180,000. He is owed £120,000 and Harriet is owed £80,000.
Gavin receives £120,000 and Harriet receives £60,000. She is an unsecured creditor for £20,000.
G reg first so prior tempore jure = has real right prevails
Examples 2 ranking
A owns house. Security in favour of B for £100,000 and ifo C for £100,000. House sold for £150,000 How to distribute if B and C rank pari passu?
If B ranks first (prior tempore potior jure)?
- they are ranked equally so house sold for 150k they each get 75k then are unsecured cred for the rest
- if b ranks first because reg first then he can claim his real right in se first
A owns house. Security in favour of B for £200,000 and in favour of C for £100,000. House sold for £150,000 How to distribute if B and C rank pari passu?
200k:100k
2:1
1/(1+2) of 150
2/(1+2) of 150
1/3of 150k= 50k
2/3 of 150k= 100k
then unsecured cred for rest
house sold for 150k
Bankruptcy of deb tor: If asset worth more than debt, creditor is paid in full and balance goes to trustee in sequestration or liquidator. (Creditor cannot recover more than 100%.) If asset worth less than debt, creditor takes value of asset and is unsecured ordinary creditor for the deficiency
catholic and secondary sec
If X has a security over plots A and B and Y has a postponed security over plot B, in the event of default X would have the power to realise either plot A or plot B. If X realised plot A and X’s debt was paid in full Y would be free to realise plot B and could be paid.
However, if X instead decided that the outstanding debt would be satisfied by the sale of plot B then the proceeds of sale of plot B would go to X initially, and Y would only receive a payment in the event that X’s debt was not fully paid.
If X was not fully paid from the proceeds of sale Y could end up with only a personal right against the debtor. This is not in the interests of the debtor. The interest of the debtor is to ensure that debts should be paid as fully as possible. So the law steps in to make an equitable adjustment to the default position. In the example given X is known as a catholic creditor, and Y is known as a secondary creditor and a series of rules apply to protect the secondary creditor’s interests.
The principles applicable to catholic and secondary creditors apply whether the securities are voluntary or involuntary. However, it appears that the rules do not apply where the catholic creditor has a floating charge: see Forth and Clyde later.
W A Wilson, Debt, para 8.6 writes:
“Where there is one secondary creditor, the catholic creditor is not entitled to proceed so as to injure the secondary creditor while not obtaining any benefit himself.”
In effect this means that the catholic creditor should act in such a way as to leave the largest possible sum for the secondary creditor. However, this does not prevent the catholic creditor from realising plot B. Plot B may be more marketable. If the catholic creditor realises plot A and the debt due is satisfied the catholic creditor’s security over plot B will be discharged and the secondary creditor will be able to realise plot B and obtain payment. However, if the catholic creditor realises plot B the catholic creditor must assign his security over plot A to the secondary creditor.
general sec and special sec
gen= often std sec
special security that only goes over debt
Some securities general/unrestricted (“all sums due and to become due”) ie creditor can charge asset with any debt due to him by that debtor. Others special/restricted ie creditor can charge only certain debts to that asset
transfer rights in sec
follows the acceory principal
the two rights for cred holding right in sec
the personal right against against the debtor for fulfilment of personal obl- when they assign the personal right they have to assign the right in the security and intimate to the debtor. if they do then no assignation
the real right in the encumbered subject
- there is an attempt to assign the claim to payment
there is an attemot to assign the right to sec
it matters if the right in sec is created by reg
UK ACORN FINANCE LTD vsmith
uk arcorn was about transferring righ in sec had to assign the personal right and the real right which required reg of the std secHELD if it was to be a valid assignation the personal right of assignating by communicating and real right = the public act of reg the std sec would need to be sone
enforcement in right of sec
Security can generally be enforced by sale. (Exception to the principle of nemo plus juris ad alium transferre potest quam ipse habet?) Obligation to get best price. Balance returned to debtor, or to other secured creditors.
The principal exception to this is the floating charge where the creditor has no power to realise the asset. But see also the landlord’s hypothec.
APPLY to court to get power to sell cred can sell as non owner. crd will get a real rihg agreement/ opledge no needed
where commercial need to serve a calling up notice = 2 month to comply OR notice by default= 1 month
RESIDENTIAL GO TO COURT
any money left from sale of house goes to debtor or other cred
FLOATING CHARGE GETS PRIORITY BEFORE UNSECURED CRED
.
extoinction of right of sec
Extinction of rights in security
Rights in security can be extinguished in various ways including:
(a) following the accessory principle, extinction of the obligation (see payment and commercial paper for discussion of extinction of debts);
(b) discharge of the security;
(c) the destruction of the encumbered property
; (d) voluntary renunciation (in whole or in part) of the security by the creditor;
(e) confusio – where the holder of the security is also owner of the encumbered subjects
; (f) compulsory acquisition of the property; (
g) being struck down by the court under (i) vices of consent; (ii) the offside goals rule (see your lectures on property law – but note the special rule for offside goals where the competing real right is another right in security); (iii) the rules striking down unfair preferences (see the insolvency lectures later); and
(h) enforcement of the security
