Selected key concept – restrictions on dealing with the collateral

Another key concept that is relevant in security agreements is the restrictions on dealing with the collateral. As a start, legal practitioners need to have a good understanding of the meaning of “collateral”:

• • Collateral is personal property offered up by a grantor as security for a debt or other obligation owed to sellers, financiers or other secured parties.
• • Collateral is personal property that has a security interest attached to it.

A secured party will not want a grantor to have the ability to deal with the collateral. As such, a secured party will usually not permit a grantor to do, or to agree to do, things such as sell, assign, transfer, lease, licence, or part possession with the collateral. This guidance note explains the important concept of restrictions on dealing with the collateral by way of, among other things, practical examples.

See Selected key concept — restrictions on dealing with the collateral.