Law Commission Consultation Paper No 225 - Bills Of Sale .

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Law CommissionBills of SaleConsultation Paper No 22551172 Law Comm Cover 12mm.indd 1FirearmsBills of SaleLawAA ScopingConsultationConsultationPaper 3/09/2015 21:03

Law CommissionConsultation Paper No 225BILLS OF SALEA Consultation Paper

Crown copyright 2015This publication is licensed under the terms of the Open Government Licence v3.0 except whereotherwise stated. To view this licence, visit /version/3 or write to the Information Policy Team, The National Archives, Kew, LondonTW9 4DU or email: mailto:mpsi@nationalarchives.gsi.gov.uk.Where we have identified any third party copyright information, you will need to obtain permissionfrom the copyright holders concerned.This publication is available at http://www.lawcom.gov.uk.Print ISBN 9780108561702ID 01091508 09/15Printed on paper containing 75% recycled fibre content minimum.Printed in the UK by The Stationery Office.ii

THE LAW COMMISSION – HOW WE CONSULTAbout the Commission: The Law Commission is the statutory independent body created by theLaw Commissions Act 1965 to keep the law under review and to recommend reform where it isneeded.The Law Commissioners are: The Rt Hon Lord Justice Bean (Chairman), Stephen Lewis,Professor David Ormerod QC and Nicholas Paines QC. The Chief Executive is Elaine Lorimer.Topic of this consultation paper: Bills of sale.Geographical scope: England and Wales.Duration of the consultation: 9 September 2015 to 9 December 2015.How to respondPlease send your responses either:By email to: bills of sale@lawcommission.gsi.gov.ukORBy post to:Fan Yang, Law Commission, 1st Floor, Tower, Post Point 1.53,52 Queen Anne’s Gate, London SW1H 9AGTel: 020 3334 3385For those consultees who wish to respond only to our proposals and questions inrespect of logbook loans, we have prepared a separate response form, availableat http://www.lawcom.gov.uk/project/bills-of-sale/.If you send your comments by post, it would be helpful if, where possible, youalso send them to us electronically.After the consultation: We plan to publish recommendations in 2016 and present them to theGovernment. It will be for Government and Parliament to decide whether to change the law.Consultation Principles: The Law Commission follows the Consultation Principles set out by theCabinet Office, which provide guidance on type and scale of consultation, duration, timing,accessibility and transparency. The Principles are available on the Cabinet Office website ltation-principles-guidance.Information provided to the Commission: We may publish or disclose information you provideus in response to this consultation, including personal information. For example, we may publishan extract of your response in Commission publications, or publish the response in its entirety. Wemay also be required to disclose the information, such as in accordance with the Freedom ofInformation Act 2000. If you want information that you provide to be treated as confidential pleasecontact us first, but we cannot give an assurance that confidentiality can be maintained in allcircumstances. An automatic disclaimer generated by your IT system will not be regarded asbinding on the Commission. The Commission will process your personal data in accordance withthe Data Protection Act 1998.iii

THE LAW COMMISSIONBILLS OF SALECONTENTSPageDetailed table of contentsviGlossary of termsxiiTable of abbreviationsxivChapter 1Introduction1Chapter 2Uses of bills of sale12Chapter 3The law of bills of sale21Chapter 4Consumer credit regulation35IMPACT OF THE LAWChapter 5Logbook loans54Chapter 6Access to finance for unincorporated businesses73Chapter 7The case for reform87PROPOSALS FOR REFORMChapter 8A new legislative framework96Chapter 9Simplifying the document requirements107Chapter 10Modernising the registration regime117Chapter 11Protecting borrowers133Chapter 12Protecting private purchasers153Chapter 13General assignments of book debts164Chapter 14Absolute bills of sale171Chapter 15Assessing the impact of reform178Chapter 16List of proposals and questions186iv

APPENDICESAppendix ABills of Sale Act 1878195Appendix BBills of Sale Amendment Act 1882205Appendix CCurrent standard form of a security bill211Appendix DFloating charges for unincorporated businesses212Appendix EStructure of proposed new legislation215Appendix FPeople and organisations who responded to our call for evidence216Appendix GPeople and organisations we have talked to217v

DETAILED TABLE OF CONTENTSParagraphCHAPTER 1: INTRODUCTIONPage1What are bills of sale?1.11This project1.93A long-standing problem1.134The uses made of bills of sale1.236Problems with the current law1.307Our proposals1.418Our work so far1.459The structure of this consultation paper1.5610CHAPTER 2: USES OF BILLS OF SALE12Logbook loans2.713Secured loans to buy vehicles2.2417Loans secured over other goods2.2818General assignments of book debts2.3218Absolute bills2.3619Conclusion2.4020CHAPTER 3: THE LAW OF BILLS OF SALE21Evolution of the Bills of Sale Acts3.321The Bills of Sale Acts3.1323Scope of the Bills of Sale Acts3.1523Document requirements3.3327Security over future goods3.4631Registration requirements3.4831Security bills: seizure and sale of the secured goods3.5532vi

ConclusionParagraphPage3.6334CHAPTER 4: CONSUMER CREDIT REGULATION35The landscape of consumer credit regulation4.636The scope of consumer credit legislation4.1337FCA authorisation4.2238Protections in consumer credit legislation4.2740Pre-contractual understanding4.2940Cooling off period4.3742Measures to protect borrowers in arrears4.3942Rebate on early settlement4.6046Power to reopen unfair credit relationships4.6447The Financial Ombudsman Service4.6848Self-regulation by logbook lenders4.7348Regulation that does not apply to bills of sale4.7749Conclusion4.9452IMPACT OF THE LAWCHAPTER 5: LOGBOOK LOANS54The application process5.454High Court registration5.1857Asset finance registries5.4362Enforcement5.4863Private purchasers5.8069Conclusion5.9372vii

ParagraphPageCHAPTER 6: ACCESS TO FINANCE FOR UNINCORPORATED BUSINESSES73Security bills over specific goods6.574General assignments of book debts6.1976Future goods6.5583Conclusion6.6586CHAPTER 7: THE CASE FOR REFORM87Why bills of sale should not be “banned”7.587The need for reform7.1589A new statute7.1890Logbook loans7.2491Secured loans to buy vehicles7.3692Loans secured over other goods7.3993General assignments of book debts7.4694Absolute bills7.4894Problems outside our remit7.5094Conclusion7.5495PROPOSALS FOR REFORMCHAPTER 8: A NEW LEGISLATIVE FRAMEWORK96Repeal of the Bills of Sale Acts8.496New terminology8.797The scope of the new legislation8.1498How would a goods mortgage take effect?8.34102Should any goods mortgages be prohibited?8.41104Conclusion8.52106viii

ParagraphCHAPTER 9: SIMPLIFYING THE DOCUMENT REQUIREMENTSPage107Standard form under the 1882 Act9.5107A goods mortgage should be in writing9.10108Contents of a goods mortgage document9.14109Prominent statements in logbook loans9.17114Prominent statements for other loans9.21115Sanction for failure to comply9.23116Conclusion9.26116CHAPTER 10: MODERNISING THE REGISTRATION REGIME117Registering security interests: conceptual framework10.5117Why register?10.7118Asset register or debtor register?10.14119Effect of registration: “attachment” and “perfection”10.18120Reasons to register logbook loans10.22121Reasons to register other goods mortgages10.29122Our proposals10.36123Registering vehicle mortgages10.37123Designating asset finance registries10.43124Criteria for designating asset finance registries10.53126Mortgages on other goods10.62127Simplifying the High Court registry10.65128Ensuring the accuracy of the registers10.81131Conclusion10.87132CHAPTER 11: PROTECTING BORROWERS133The right of seizure for bills of sale11.4ix133

ParagraphPageHire purchase: the need for a court order11.7134Extending court orders to goods mortgages11.17136Shortfall11.42141Voluntary termination11.46143Voluntary termination in hire purchase11.48143Extending voluntary termination to goods mortgages11.62147Secured loans to buy vehicles11.77151Non-regulated credit agreements11.80151Conclusion11.82152CHAPTER 12: PROTECTING PRIVATE PURCHASERS153Private purchaser protection in hire purchase law12.4153Private purchaser protection for goods mortgages12.26158The arguments put by logbook lenders12.34159The role of the Financial Conduct Authority12.48162The role of the Financial Ombudsman Service12.53162Conclusion12.56163CHAPTER 13: GENERAL ASSIGNMENTS OF BOOK DEBTS164The case for registration13.5164Registration under the current law13.8165Our proposals for the registration of goods mortgages13.12165of book debts13.16166The assignment document13.22167The registration form13.27168A comparison13.29168Adapting these proposals for the registration of general assignmentsx

ConclusionParagraphPage13.33170CHAPTER 14: ABSOLUTE BILLS OF SALE171Current law14.5171Historical perspective14.9172Modern usage14.12172Is there a need to register absolute bills?14.21174Our proposal14.32176Conclusion14.37177CHAPTER 15: ASSESSING THE IMPACT OF REFORM178Vehicle mortgages: benefits and costs to the industry15.2178Mortgages over other goods: benefits and costs to the industry15.17182General assignments of book debts: benefits and costs to the industry15.24184CHAPTER 16: LIST OF PROPOSALS AND QUESTIONS186APPENDICESAPPENDIX A: BILLS OF SALE ACT 1878195APPENDIX B: BILLS OF SALE AMENDMENT ACT 1882205APPENDIX C: CURRENT STANDARD FORM OF A SECURITY BILL211APPENDIX D: FLOATING CHARGES FOR UNINCORPORATED BUSINESSES212APPENDIX E: STRUCTURE OF PROPOSED NEW LEGISLATION215APPENDIX F: PEOPLE AND ORGANISATIONS WHO RESPONDED TO OUR CALL FOREVIDENCE216APPENDIX G: PEOPLE AND ORGANISATIONS WE TALKED TOxi217

GLOSSARY OF TERMSAbsolute bill of saleA bill of sale granted for purposes other than tosecure the repayment of a loanActual noticeA person has actual knowledge of facts if those factsare within that person’s first hand knowledgeAffidavitA statement of fact sworn under oath or affirmationbefore a person authorised by law to administeraffidavitsAssignmentThe transfer of a right from one person to another,such as by way of saleBankruptcyA process by which the assets of an insolventperson are realised and distributed among theircreditorsBill of saleA document that transfers ownership of goods fromone person (A) to another in circumstances where Aretains possession of the goodsBook debtsSums owed to a business by its customersChargeA non-possessory security interest over goods whichgives the lender the right to have the proceeds ofsale of the charged goods for the satisfaction of thesecured loan. A charge does not transfer ownership.Goods can be subject to multiple charges granted todifferent lendersChose in actionA personal right which can only be enforced byactionConditional saleAn agreement under which a person (A) takespossession of goods on terms that A makespayment instalments and does not become theowner of the goods until, usually, A has paid all theinstalmentsConsiderationThe inducement for parties to enter into a contract,which can take any formConstructive noticeA legal presumption that a person has notice of factsif that person can discover those facts by duediligence or inquiry into the public recordsCreditor (or lender)A person to which another person owes money or itsequivalentxii

FactoringA form of invoice financing in which the invoicefinancier is responsible for collecting book debtsfrom the business’s customersFacultative agreementA form of invoice financing in which the business isobliged to offer to the invoice financier all book debtsthat fall within the scope of the facultative agreementas they arise. The invoice financier is not obliged topurchase the book debts, but almost invariably willFixed chargeA charge over specific assets to secure therepayment of a loanFloating chargeA charge over a class of assets or, more usually,over all of the assets of the borrower, both presentand future to secure the repayment of a loan. Oninsolvency, the floating charge “crystallises” over theassets the borrower owns at that momentGeneral assignmentThe transfer of a class of rights, both present andfuture, from one person to anotherGuaranteeA person (A) guarantees the debts of another person(B) if A makes a promise to answer for therepayment of B’s debts if B defaults.Hire purchaseAn agreement under which goods are hired to aperson (A) on terms that A makes paymentinstalments and does not become the owner of thegoods until, usually, A has paid all the instalmentsand exercised an option to purchase the goodsInsolventA person is insolvent if they have insufficient assetswith which to satisfy their debts and financialliabilitiesInvoice discountingA form of invoice financing in which the businessremains responsible for collecting book debts fromits customers. The business then transfers suchsums as necessary to the invoice financierInvoice financierThe party that buys book debts from a business inreturn for making available to the business apercentage of the value of the book debtsInvoice financingAn agreement under which a business sells its bookdebts to an invoice financier in return for the invoicefinancier making available to the business apercentage of the value of the book debts. When thecustomer pays the book debt, the invoice financierreceives the amount of its advance plus charges.The business receives the balancexiii

LienA right to hold goods belonging to another personuntil that person repays the debt or performs someother obligation. The creditor does not have the rightto sell the goodsPledgeA right to hold goods belonging to another personuntil that person repays the debt or performs someother obligation. The creditor has the right to sell thegoods if the borrower defaultsSecurity bill of saleA bill of sale granted to secure the repayment of aloanStock-in-tradeGoods that a business keeps in stock for thepurposes of carrying on its businessTrustee in bankruptcyA person that takes control of an insolvent person’sassets in order to sell them and share the proceedsamong the creditorsWhole turnoveragreementA form of invoice financing in which the businesssells all its book debts, both present and future, tothe invoice financierABBREVIATIONSABFAAsset Based Finance AssociationBISDepartment for Business, Innovation and SkillsCCTAConsumer Credit Trade AssociationCONCFCA’s rulebook dealing with consumer creditDVLADriver and Vehicle Licensing AgencyFCAFinancial Conduct AuthorityFOSFinancial Ombudsman ServiceHCSTCHigh-cost short-term creditOFTOffice of Fair TradingONLINE CONTENTAll websites and electronically available materials referenced in this consultationpaper were last accessed on 25 August 2015.xiv

CHAPTER 1INTRODUCTIONWHAT ARE BILLS OF SALE?1.1Bills of sale are a means by which individuals can use goods they already own assecurity for loans, while retaining possession of those goods.1.2In English law, there are many ways of securing a loan. However, bills of saleoccupy a distinct niche in the law of security interests because:1(1)unlike hire purchase (which is used to buy new goods), bills of sale aregranted on goods the borrower already owns;1(2)unlike pawnbroking (where the lender takes possession of the goods),bills of sale allow the borrower to keep the goods while makingrepayments;(3)unlike mortgages on land, bills of sale are secured on moveable tangiblegoods; and(4)unlike company charges (which are granted by companies and limitedliability partnerships), bills of sale can only be granted by individuals andunincorporated businesses.See para 4.79 in Chapter 4 for an explanation of hire purchase. Hire purchase is, strictly,not a form of security but a functional equivalent. The protections for hirers and privatepurchasers in hire purchase law that we discuss in this consultation paper also apply toconditional sale. A conditional sale is an agreement under which the purchaser takespossession of goods and makes payment instalments. Ownership of the goods does notpass to the purchaser until, usually, the purchaser has paid all the instalments. Referencesin this consultation paper to hire purchase include conditional sale.1

Bills of sale in the nineteenth century1.3Bills of sale were common in Victorian times. Concerns were expressed at thattime that moneylenders could use bills of sale to lead “thousands of honest andrespectable people to their ruin”.2 It was said that borrowers did not understandthe effect of what they were signing.3 They did not realise that they weretransferring ownership in their household goods to a moneylender, who couldthen seize the goods from them on default. The moneylender could also seize thegoods from a subsequent purchaser, who bought them in good faith, unaware ofthe moneylender’s interest. Similarly, it was also a concern that other creditorscould suffer detriment because of secret bills of sale.41.4As a result, Parliament passed the Bills of Sale Act 1878 and the Bills of SaleAmendment Act 1882.5 We refer to these as the 1878 Act and the 1882 Actrespectively and together as the Bills of Sale Acts. The Bills of Sale Acts did notcreate bills of sale, which exist at common law, but were designed to regulatetheir use. Unfortunately, they do so in a particularly opaque way. The Bills of SaleActs first drew adverse comment within just a few years of their enactment, andhave been criticised many times since. Yet they continue in force.Bills of sale in the twenty-first century: logbook loans1.5In the twenty-first century, bills of sale have been revived in the form of “logbookloans”. This is a form of sub-prime consumer credit secured on a vehicle.Borrowers transfer ownership of their existing car, van or motorcycle to thelogbook lender, while continuing to use it. The borrower hands the logbook lenderthe V5C registration document – or “logbook” – but this is purely symbolic andhas no legal effect.1.6The legal effect is produced by a document, the “bill of sale”, which must meetthe complex requirements of the 1882 Act. The logbook lender must then registerthe bill of sale at the High Court, in accordance with Victorian procedures, atsome cost in time and money. We will see in Chapter 5 that the register appearsunfit for purpose.2Hansard (HC), 8 March 1882, vol 267, cc393-402.3Hansard (HC), 17 May 1854, vol 133, cc474-477: “Persons were in the habit of obtainingcredit upon the supposition that they possessed valuable property in the shape of furnitureand stock in trade, but, when the creditor had obtained judgment and the officer came tolevy execution, it oftentimes turned out that the debtor had given a bill of sale of all hepossessed”.4”The 1878 Act was designed to prevent the rights of creditors from being affected by secretdispositions of property by persons remaining in possession of that property” (H Beale, MBridge, L Gullifer, E Lomnicka, The Law of Security and Title-Based Financing (2nd ed,2012), p 431, para 11.06).5Its full title is the Bills of Sale Act (1878) Amendment Act 1882.2

1.7Twenty-first century consumers who come across logbook loans face the samedifficulties as their Victorian counterparts who came across bills of sale securedon household goods: there continue to be complaints that borrowers do notunderstand what they are signing; that borrowers who default risk having theirvehicles seized too readily; and that those who, unwittingly, buy a second handvehicle subject to a logbook loan are faced with stark choices. Usually, they havethe choice of paying off someone else’s logbook loan, paying for the vehicle asecond time or losing the vehicle they have paid for.1.8The detriment suffered by consumers who engage with logbook loans hasattracted much criticism in the media. The headlines below all appeared in 2014:Beware ‘toxic’ logbook loans;6Citizens Advice warning over legal logbook loans;7Logbook lenders are flouting the law, say debt advisers.8THIS PROJECTTerms of reference1.9In September 2014, Her Majesty’s Treasury asked the Law Commission toexamine the Bills of Sale Acts and consider how they can be reformed. Our termsof reference are as follows:Her Majesty’s Treasury asks the Law Commission to review the Billsof Sale Acts 1878 to 1891.9 In particular, the Law Commission isasked:(1) to consider the use which is currently made of the legislation andhow far it meets the needs of users and third parties, and(2) to make recommendations for reform, to ensure that the law inthis area is up-to-date, fair, and effective.Geographical scope1.10The Bills of Sale Acts do not apply to Scotland.10 Accordingly, this is not a jointproject with the Scottish Law Commission and we make proposals for Englandand Wales dingpayday.9Minor amendments to the Bills of Sale Acts were made in the Bills of Sale Act 1890 andthe Bills of Sale Act 1891. These amendments were incorporated into the Bills of SaleActs.10The Scottish Law Commission considers that Scottish law requires, in general, securityover moveable tangible property to be possessory (Scottish Law Commission, DiscussionPaper on Moveable Transactions (2011) Discussion Paper No 151, p 142, para 16.1).3

Next steps1.11We seek views on our proposals and replies to our questions by 9 December2015. For those consultees who wish to respond only to our proposals andquestions in respect of logbook loans, we have prepared a separate responseform.11 All responses should be sent to the address on page iii. Our aim is topublish final recommendations in summer 2016.1.12Our 2016 report will not include a draft bill. However, if our recommendations areaccepted by Government, our intention would be to draft a bill thereafter.A LONG-STANDING PROBLEM1.13Criticism of the Bills of Sale Acts is not a recent development. In 1888, LordMacnaghten commented that to say the meaning of the 1882 Act:is reasonably clear, would be to affirm a proposition to which I thinkfew lawyers would subscribe, and which seems to be contradicted bythe mass of litigation which the Act has produced and is producingevery day. For my own part, the more I have occasion to study theAct the more convinced I am that it is beset with difficulties which canonly be removed by legislation.121.14In the past 50 years, the Bills of Sale Acts have been examined four times. Eachreview made major criticisms of them.Earlier reviews1.15In 1971 and 1986, two major reviews on credit law called for the repeal of theBills of Sale Acts. In 1971, the Crowther report commented:It is difficult to imagine any legislation possessing more technicalpitfalls than the Bills of Sale Acts, particularly in relation to securitybills of sale.131.16In 1986, the Diamond report concluded:The time has come to repeal the Bills of Sale Acts.141.17In 2002, the Law Commission’s consultation paper on the registration of securityinterests also considered the Bills of Sale Acts in the context of lending tounincorporated businesses. Then, we concluded that serious considerationshould be given to reform. Our final report on registration of security interests wasconfined to those granted by companies.1511Available at Thomas v Kelly and Baker (1888) 13 App Cas 506 at 517.13Report of the Committee on Consumer Credit, vol 1 (1971) Cmnd 4596, p 179.14A Diamond, A Review of Security Interests in Property (1989), p 92, para 18.1.8.15Company Security Interests (2005) Law Com No 296.4

Consultation on logbook loans in 20091.18A consultation by the Department for Business, Innovation and Skills (BIS) in2009 was the first time that the Bills of Sale Acts were examined from theperspective of logbook loans. The consultation noted:The Government is concerned that increasing numbers of vulnerableconsumers who resort to bill of sale loans are ending up in a muchworse position and slipping further into unsustainable debt as aresult.161.19BIS criticised the complexity of the Bills of Sale Acts and the imbalance betweenthe rights of the lender and those of the borrower:Their complexity makes it difficult for consumers to understand fullythe liability they are taking on when they borrow. We are concernedthat the relationship under a bill of sale loan arrangement isinappropriately weighted in favour of the lender to the detriment of theconsumer. This creates a situation with the potential for the lender totake unfair advantage of the consumer.171.201.21The consultation set out four options:(1)do nothing;(2)introduce a voluntary code of practice or other non-statutory regulation;(3)reform the Bills of Sale Acts; or(4)ban the use of bills of sale for consumer lending, this being the approachthat was proposed.18In 2011, following a change of Government, BIS published its response to theconsultation. BIS noted that “the evidence received in response to theconsultation did not indicate that the problems identified were sufficient to justify aban on using bills of sale for consumer lending”.19 Nor did BIS even propose thereform of the Bills of Sale Acts as:the size of this task compared to the size of the problem and the longtime lag before consumers would see any benefits made this anunattractive option.2016BIS, A better deal for consumers: consultation on proposals to ban the use of bills of salefor consumer lending (2009), p 4.17Above, p 6, para 1.18Above, p 7, para 5.19BIS, Government response to the consultation on proposals to ban the use of bills of salefor consumer lending (2011), p 11, para 39.20Above, p 11, para 37.5

1.22Instead, BIS saw a voluntary code of practice as the solution.21 This led to theintroduction of the Consumer Credit Trade Association code of practice forlogbook lenders (the CCTA Code), which we discuss in Chapter 4.THE USES MADE OF BILLS OF SALE1.23Our terms of reference ask us to consider the uses which are currently made ofbills of sale. We therefore examined the High Court registry where bills of salemust be registered.22 We started by looking through over 2,000 bills of sale inorder to ascertain the broad uses made of them. We then examined 102 bills ofsale in depth. The results are set out in Chapter 2.Logbook loans1.24Bills of sale are overwhelmingly (but not exclusively) used for logbook loans.Logbook loans account for over 90% of bills of sale registered at the High Courtand are therefore central to this review.Other uses1.25Bills of sale may also be used to:(1)buy new vehicles as a direct alternative to hire purchase. This evades theprotections available to hirers in hire purchase law;23 and(2)borrow money on the security of goods other than vehicles. An exampleis an unincorporated business, such as a hotel, borrowing money on thesecurity of its furniture and fittings.241.26The 1878 Act also applies to general assignments of book debts.25 Whenunincorporated businesses make a general assignment of book debts, theassignment is not a bill of sale. However, the Insolvency Act 1986 requires that itis registered “as if it were” a bill of sale, in accordance with the procedure set outin the 1878 Act. Otherwise it is ineffective against a trustee in bankruptcy.261.27This means that our review is wider than just logbook loans. In Chapter 6, weconsider the effect of the Bills of Sale Acts on lending to unincorporatedbusinesses. Although most of our proposals are targeted at consumer creditagreements secured on vehicles, we are also alive to the consequences of ourproposals for:(1)loans secured on goods other than vehicles;21Above, p 11.22See para 1.34.23See paras 2.24 to 2.27 in Chapter 2.24See paras 2.28 to 2.31 in Chapter 2.25See paras 6.19 to 6.54 in Chapter 6.26Insolvency Act 1986, s 344. Section 71(3) of the Enterprise and Regulatory Reform Act2013 made provision for minor amendments to s 344. The amendments are to come intoforce on a date to be appointed by the Secretary of State (Enterprise and RegulatoryReform Act 2013, s 103(3)).6

(2)loans for business purposes which exceed 25,000, and which aretherefore outside the consumer credit regime; and(3)general assignments of book debts. We consider how our proposalsaffect the registration of general assignments in Chapter 13.Absolute bills1.28The 1878 Act is not confined to bills of sale used to secure loans. It alsoregulates documents which transfer ownership of goods outright, while allowingthe transferor to keep possession. These are known as “absolute bills”.1.29As we discuss in Chapter 2, we found no evidence that any absolute bills wereregistered in 2014. In Chapter 14, we propose that absolute bills should no longerbe regulated.PROBLEMS WITH THE CURRENT LAW1.30The current law suffers from five key defects:(1)it is unduly complex;(2)it requires highly technical documentation;(3)the registration regime is in need of modernisation;(4)it offers little protection to borrowers; and(5)it offers no protection to purchasers.Undue complexity1.31There is widespread consensus that the Bills of Sale Acts are far too complex.This applies to both the language used in the legislation, and to the specificrequirements it sets out.1.32It is impossible to say now whether the language of the Bills of Sale Acts wouldhave been comprehensible to the Victorian reader. It is with certainty that we cansay that it is impenetrable for the modern reader.Technical document requirements1.33The 1882 Act requires that a bill of sale document complies with a long list oftechnical requirements, with severe consequences if there is a failure to do so.Unfortunately, these requirements are more likely to baffle the borrower than towarn them about the conseque

CHAPTER 2: USES OF BILLS OF SALE 12 Logbook loans 2.7 13 Secured loans to buy vehicles 2.24 17 Loans secured over other goods 2.28 18 General assignments of book debts 2.32 18 Absolute bills 2.36 19 Conclusion 2.40 20. CHAPTER 3: THE LAW OF BILLS OF SALE . 21 Evolution of the Bills of Sale Acts 3.3 21 The Bills of Sale Acts 3.13 23

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