The University of Southampton
Courses

LAWS6128 Principles of Secured Transactions

Module Overview

The provision of credit is central to the financing of commercial activity. A significant factor dictating the availability and the terms governing the provision of credit is the ability of the borrower to provide security to the lender for the repayment of credit. This 15 CATS module will introduce the foundational principles surrounding the grant of security for the repayment of credit through the concepts of attachment, perfection and priority. It will also consider and distinguish the principle possessory and non-possessory security interests recognised in English law and the enforcement powers they confer upon the lender.

Aims and Objectives

Module Aims

The aims of the module are: • to enhance student’s understanding of the functions of security in effecting the repayment of credit and the role of security within the insolvency process; • to give students a sound knowledge and understanding of the fundamental principles governing the grant of security for the repayment of credit; • to give students a sound knowledge and understanding of the principle features of possessory and non-possessory security interest in contrast to personal and quasi security interests and their respective roles within commercial financing; • to enable students to develop their powers of legal analysis through a critical examination of the policy objectives of the law governing security for credit within the wider economy.

Learning Outcomes

Knowledge and Understanding

Having successfully completed this module, you will be able to demonstrate knowledge and understanding of:

  • The rationale for security for the repayment of money.
  • Principles governing the attachment, perfection and priority of security interests.
  • Common forms of real security over property.
  • Powers and remedies of the lender in the event of the borrower’s insolvency.
  • Common issues affecting security transactions including: a. Borrower’s title and capacity; b. Vitiating factors; c. Controls over loan terms; d. Competition with the rights of other creditors.
Transferable and Generic Skills

Having successfully completed this module you will be able to:

  • Identify and locate relevant primary and secondary (including electronic) legal sources.
  • Analyse, synthesise and critically evaluate primary and secondary legal materials.
  • Formulate and present a coherent and logical legal argument supported with appropriate evidence.
  • Given a factual scenario identify the relevant facts and legal issues and accurately evaluate the resulting legal position with appropriate use of supporting evidence.
  • Effectively communicate in written English legal argument and problems solving.
Subject Specific Intellectual and Research Skills

Having successfully completed this module you will be able to:

  • Critically evaluate the functions of security for the repayment of credit within wider economic activity with a focus upon small to medium size enterprises.
  • Assess the impact of the grant of security within insolvency processes.
  • Evaluate different approaches to the principles of attachment, perfection and priority of security interests over property.
  • Describe and critically evaluate the different forms of security and their role within the promotion of the economic success of small to medium size enterprises.

Syllabus

The syllabus will focus upon loan financing within the small to medium size business context (NB It will not cover equity financing): • The function of security for the repayment of money. • The fundamental principles and differing approaches governing the attachment, perfection and priority of security interests. • Possessory security – the requirements of a valid pledge and lien and their continuing role within commercial financing • Non –possessory security – the differing structures of mortgages and charges and the distinction between fixed and floating charges. • The borrower’s insolvency - powers, remedies and duties of the lender/insolvency practitioner within insolvency regimes and the significance of corporate rescue. • Within each common form of security consideration will be given to common issues affecting security transactions including: Borrower’s title and capacity; Vitiating factors; Controls over loan terms; Competition with the rights of other creditors.

Learning and Teaching

Teaching and learning methods

Teaching methods include: • Weekly seminars, incorporating individual student presentations with opportunities for group presentations (the balance between individual and group presentations will depend on the number of students in the module). Learning methods include: • Directed reading, as per distributed reading lists; • Additional reading as provided on Blackboard lists • Engagement with daily business reports in news media, whether online or in newspapers, to ensure the students can relate the materials being discussed to every day issues in the financing of small to medium size companies.

TypeHours
Independent Study130
Teaching20
Total study time150

Resources & Reading list

Calnan (2013). Taking Security: Law & Practice. 

Beale, Bridge, Gullifer & Lomnicka (2012). Law of Security and Asset Based Financing. 

Wood (2007). Law and Practice of International Finance. 

Gullifer & Payne (2015). Corporate Finance Law. 

Goode & Gullifer (2013). Legal Problems of Credit and Security. 

Goode, Kronke & McKendrick (2015). Transnational Commercial Law: Text Cases and Materials. 

Dahan (ed) (2015). Research Handbook on Secured Financing in Commercial Transactions. 

Assessment

Formative

Coursework

Summative

MethodPercentage contribution
Examination  (1.5 hours) 100%

Repeat

MethodPercentage contribution
Examination  (1.5 hours) 100%

Referral

MethodPercentage contribution
Examination  (1.5 hours) 100%
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