Articles

Consigned goods under the Personal Property Securities Act (PPSA)

It is generally well known that since the Personal Property Securities Act (PPSA) came into force, retention of title clauses are no longer of themselves sufficient to protect suppliers, and registration under the PPSA is required to perfect a supplier's interest in those goods. What is less well known is that goods supplied on consignment also come under the PPSA requiring registration to perfect a consignor's interest.

Supplying goods on consignment generally has goods delivered to a customer and stored at their premises, with no obligation on the customer to purchase any of those goods until they order them. It is only on an order that a customer becomes contractually bound to purchase the goods stored at their premises and generally, before the goods are ordered a supplier is at all times able to uplift the goods. If the supplier does not register their interest in the consigned goods under the PPSA, on a customer's receivership the supplier will not be able to reclaim those goods and the goods may be taken under the receivership. What this means is that if a supplier does not register its interest, a customer can grant to third parties better rights (i.e. rights of ownership) to the consigned goods than what the customer itself has in those goods.

If you are a supplier of goods, and especially a supplier of goods on consignment, make sure that you contact us to ensure your terms of trade protect you.