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The Law of Tracing in Commercial Transactions by Raczynska, Magda (1st February 2018)

7 What Should a Default Proceeds Rule Be?

From: The Law of Tracing in Commercial Transactions

Magda Raczynska

Subject(s):
Property and title and choice of law — Interests and terminology and transfer of title

This chapter examines the extent to which security interests and title-based interests should be asserted by default in proceeds, products and fruits of the original asset. It considers whether allowing or disallowing a secured creditor or a supplier to automatically have a proprietary interest in the proceeds, products and fruits should be a default or a mandatory rule. It also explains how the extent to which extending interests to proceeds, products or fruits affects the categorization of interests as security or title-based finance. After discussing the issue of reform of the English law governing secured transactions and title-based finance, the chapter analyses property law and economic efficiency considerations in shaping the default rules. It also looks at security in proceeds under Article 9 of the U.S. Uniform Commercial Code (UCC) and asks whether reform of the English law should follow Article 9 UCC.

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