- Subject(s):
- Contract — Property and title and choice of law — Interests and terminology and transfer of title
This chapter considers the ways in which a secured creditor or a holder of a title-based interest may bargain for interest in derived assets (proceeds, products or fruits) where the agreement contains a derived asset clause. Parties may bargain for interest in proceeds, products or fruits by way of a clause in the agreements or by virtue of the relationship between proprietary interests and derived assets. The effect of dispositions of assets subject to security interests depends on whether the charge is fixed and floating. The chapter first examines sale of goods contracts with retention-of-title (RoT) clauses that extend the retention of title to proceeds and products, along with security agreements bearing derived asset clauses. It also explains the effect of derived asset clauses as after-acquired property clauses, focusing on pledges and legal mortgages, equitable security interests, and security interest in after-acquired property granted in a document by an individual.
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