Purchase Money Inventory Security Agreement | Canada
If you sell inventory on credit to your customers, secure payment for the goods with this Canada Purchase Money Security Agreement.
- The supplier (as secured party) agrees to extend credit to the customer (as debtor) for the purchase of inventory, in exchange for a purchase money security interest in all of the debtor's present and future inventory and proceeds.
- The term 'proceeds' includes cash and non-cash proceeds, such as accounts, contract rights, and chattel paper.
- The debtor cannot sell or transfer any of the collateral except in the ordinary course of business, and the customer must hold the proceeds of the sale in trust for the secured party.
- The secured party has the right to take possession of the collateral if the debtor fails to make payment or defaults under the terms of the Agreement.
- The Purchase Money Inventory Security Agreement gives Canadian suppliers a more secure method of selling goods on credit. It can be used in any province that has Personal Property Security Act legislation.
Last Updated: 29-June-2021