This chapter discusses the interplay between credit and security. In a commercial context, credit refers to a person's financial status or reputation for solvency or a sum of money owed from the bank's records. Additionally, credit facilities play a key role in financing the acquisition of goods and services or supporting general business activity. Credit is supplied whenever the payment of a debt is contractually deferred through either loan credit and sales credit or fixed sum and revolving credit. The chapter then provides an overview of the variety of arrangements developed to fulfil the creditor's desire for either real or personal security.
Chapter
21. Credit and security
Chapter
24. Introduction
D Fox, RJC Munday, B Soyer, AM Tettenborn, and PG Turner
This chapter serves as an introduction to commercial credit and security. Credit plays an important role in the world of commerce. In the sale of goods, for example, the seller may have to borrow money from a bank so that he can obtain the buyer’s order and supply the goods as required. The bank loan is a form of credit. This chapter first considers the definition of credit before discussing two forms of credit: loan credit and sale credit. It then examines the nature and purpose of security, real security and security interest, and quasi-security. It also describes the three stages involved in the process of creating an effective security interest: attachment, perfection, and priorities. Finally, it analyses the agreement to give security over future property and the proposed reform of the applicable law.
