Skip to content
As enacted
Contents

Part V · Priorities

37. Priority of acquisition security rights

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

(1)

An acquisition security right in inventory or its proceeds shall have priority over any other security right in the same collateral given by the same debtor, if -

(a)

the acquisition security right was perfected at the time the debtor obtained possession of the inventory or a third party at the request of the debtor obtained or held possession of the inventory;

(b)

before the debtor receives the possession of the inventory, the secured party of the acquisition security right gives notice in writing to every other secured party who has, before the date of registration by the secured party of the acquisition security right, registered a financing statement that describes the collateral as or as including-

(i)

items or types of inventory, all or some of which are the same as the items or types of inventory that will be subject to the acquisition security right;

(ii)

inventory; or

(iii)

accounts; and

(c)

the notice referred to in paragraph (b) states that the person giving it has or expects to acquire an acquisition security right in inventory of the debtor, describing such inventory by item or type.

(2)

Except where the collateral or its proceeds is either inventory or its proceeds, an acquisition security right in collateral or its proceeds shall have priority over any other security right in the same collateral given by the same debtor, if the acquisition security right-

(a)

in the case of a collateral other than an intangible collateral, was perfected before or within ten days after the debtor obtained possession of the collateral as the debtor, or a third party at the request of the debtor obtained or held possession of the collateral, whichever occurs earlier; or

(b)

in the case of an intangible collateral, was perfected before or within ten days after the creation of the acquisition security right in the intangible collateral.

(3)

If more than one acquisition security right is given priority due to the application of the provisions of subsections (1) and (2), the acquisition security right, if any, of the seller, shall have priority over any other acquisition security right given by the same debtor.

Part VI

Registration

Part VII

General Provisions

Part VIII

Repeals and Savings

Part IX

Interpretation