31. Perfection as to proceeds

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

Where dealing with a collateral gives rise to proceeds, the security right in such collateral-

(a)

continues, unless the secured party expressly or impliedly authorizes the dealing with the collateral free of the security right; and

(b)

extends automatically to the proceeds, even though it may not be covered by the security agreement.

(2)

If a secured party enforces a security right against both the collateral and the proceeds, the amount secured by the security right in the collateral and the proceeds shall be limited to the market value of the collateral at the date of the dealing.

(3)

A security right in proceeds shall be a continuously perfected security right, if the interest in the collateral was perfected when the proceeds arose.

(4)

Where a security right in the original collateral is perfected otherwise than by registration, the security right in the proceeds becomes unperfected ten days after the debtor acquires an interest in the proceeds, unless the security right in the proceeds is perfected under this Act.

Read on from s 32

Part V

Priorities

Read on from Part V

Part VI

Registration

Read on from Part VI

Part VII

General Provisions

Read on from Part VII

Part VIII

Repeals and Savings

Read on from Part VIII

Part IX

Interpretation

Read on from Part IX