ABSTRACT
[25.01] This Chapter will deal with the ways in which the supplier of credit to facilitate the acquisition of goods can obtain security in respect of the performance by the private consumer of the latter's contractual obligations, which are principally to take delivery (see para 23.08 , et seq.) and pay the price or rent (see para 27.16 ). Such security may be personal or real, and the various forms of security can often be used cumulatively.
Personal security. This offers the supplier a further action against a third party 1 and is fairly commonplace in instalment credit transactions, particularly when there is some doubt as to the efficacy of the legal obligation upon the private consumer, e.g. buyer, hirer or borrower, as where he is a minor (see para 10.18 ) or as to his financial status. 2 Personal security may take the form of requiring a third party to go surety for, or insure, the private consumer (see paras 25.04and25.14 ), or of a wage assignment; 3 and the supplier may insist on his accepting bills of exchange or giving post-dated cheques for the instalments. 4
Real security. This offers the creditor the right to look to particular property for the satisfaction of his debt in preference to the consumer debtor's general creditors; and it is particularly useful in the debtor's insolvency (see para 19.22 ). However, from the legal viewpoint a clear distinction must be drawn between two types of secured credit: 5
Supply of goods on credit. Whilst undoubtedly creating a debt, 6 price deferment or rental due has always been regarded by English law as essentially different from loan credit (see below). 7 The major methods by which the purchase-money ‘lender’ may seek to ensure payment of the deferred price or rent by retaining possession or property were considered in Chapter 24: they escaped the Bills of Sale Acts; 8 and, when property retention leads to resale, any surplus belongs to the supplier. 9
Loan credit. Where a debt 6 does not arise out of a contract for the supply of goods, the lender may seek by taking possession or property to ensure payment (see para 25.02 ); and where the lender's acquisition of property rights leads to sale, any surplus value belongs to the debtor. 9
