Determine the Rights of All the Parties-Free-Samples for Students

Question: Case Amelia, a B.C. resident, was the owner of a small yacht that was subject to an unregistered chattel mortgage to Ace Finance in the amount of $20,000. She sold the yacht to her friend Donald, who resided in Vancouver, B.C. The friend purchased the yacht for $50,000. Some time later, Donald purchased a larger yacht from a dealer and used the small yacht as a trade-in to cover part of the purchase price. The dealer made a search of security interests under the provincial Personal Property Security Act and found no claims against the yacht. The boat dealer later sold the yacht to Martin, under a conditional sale agreement for $55,000, and registered the security interest. Martin later sold the yacht to Wray for $50,000, and moved to the province of Alberta. Wray did not search for claims against the yacht at the time of the purchase, and paid over the money unaware that the boat dealer had a registered security interest in the property. The conditional sale agreement went into default when Martin neglected to make a payment to the boat dealer. The ownership of the yacht was traced to Wray, and the yacht was seized by the boat dealer. Thoroughly discuss the rights of all the parties in this case and determine the probable outcomes. Answer: Issue Amelia owns a Yacht which is has an unregistered chattel mortgage on it for $20,000. She sold it to her friend Donald for $50,000. Donald traded in the Yacht for a larger one and the dealer did not find any securities interest on the yacht under the provincial Personal Property Security Act. The dealer sold the Boat to Martin for $55,000 under a conditional sale and registered the securities interest. Martin sold the Yacht to Wary and relocated to Alberta. The conditional sale was in default and Wary had not searched for securities interests on the property. The yacht was repossessed by the boat dealer. The issue here is to determine the rights of all the parties in the scenario and the possible solutions. Rule Personal property maybe classified into two different kinds, tangible items such as goods and intangible items such as intellectual property. Goods sold in Canada are governed under the federal Sale of Goods Act and provincial sale of goods legislations which are enacted to regulate the conduct of the parties to a transaction and to ensure fair rules of sale. In case of goods the possessor has the ultimate claim over the goods unless there is a person with a prior claim on the property. The Sale of Goods Act applies where there is an actual sale which is characterized by a transfer of title. Transfer of title is usually dealt with by the rules prescribed in the Sale of Goods Act. Rule 1 states that title and risk for specific goods in a deliverable state are transferred on the execution of a contract of sale. The Act imposes an obligation on the seller to ensure that the goods sold are sold along with the proper transfer of title and goods will be free from any kind of charge or encu mbrance. A conditional sale if where the possession of the property is transferred immediately but the title of the property would be transferred in the future when the complete payment is made by the debtor. Secured transactions are transactions where a security is given of same or greater value as collateral for a debt that is promised to be paid in the future. In such a transaction the debtor owes the creditor a certain amount of money and has the title to a particular property of equal or greater value. Thus if the debtor defaults in payment of the debt the title of the property would shift to the creditor. Perfection is the third and final step in case of secured transactions, in this step the secured transaction is registered and by virtue of this registration the creditor has priority rights over the property that are higher than the claims of subsequent possessors and holders. In case of default by the debtor the creditor through perfection can take possession of the property. The creditor would also have the right to resell the property in case of possession through perfection. These rights are given to the creditor by virtue of the Personal Property Security Act. Application In the given set of circumstances, Amelia owned the yacht and it had an unregistered chattel mortgage for $20,000 to a bank and sold the same to Donald for $50,000. This would be an invalid sale as under the Sale of Goods Act the seller has a duty to transfer the title of the property free from any kind of charge or encumbrance. However, when the subsequent owner of the property searched for charges on the property under the provincial Personal Property Security Act it was found that the property was free from such charges and since it was in British Columbia it would reflect if there were any encumbrances on the property. This meant that the sale of the yacht from Amelia to Donald was a valid sale and possession and title were both transferred. Donald sold the yacht to a boat dealer and here both title and possession were transferred at the execution of the sale. This is a valid sale of the good and thus is a legally enforceable transaction. The boat dealer subsequently sold the yacht to Martin as a conditional sale. This was a secured transfer and following the provisions of the Personal Property Security Act the debtor (Martin) would be entitled to take possession of the yacht and would even have the right to resell it. Martin sold the yacht to Wary who did not search for securities interests in the property. Following the provisions of the Sale of Goods Act it would follow that the property was not sold as the sale was invalid. This is because there was no actual transfer of title as Martin was breach of his obligation to deliver the property free from any charge or encumbrance. The boat dealers claim on the yacht was still in existence. Thus, when the boat dealer exercised his right to take possession of the boat Wary did not have any claim over the boat as the title was never transferred to him. Conclusion To conclude Amelia and Donald have no existing rights over the yacht as both have transferred both the title and possession in a lawfully valid way. Martin can no longer claim rights over the title of the boat as by default of his condition in the conditional transfer his rights in the property have been extinguished. Wary who Martin sold the boat to has no claims over the boat as the title of the boat was never transferred to him due to the existing securities interest on the yacht. The boat dealer who Donald sold the yacht to is the holder of the proper title to the yacht and thus the yacht is rightfully a piece of property which he can claim. Thus, in case of a dispute regarding the title of the yacht the only the boat dealer would be successful in making a claim for the same