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Contract and Commercial Law Act 2017

Other commercial matters - Mercantile agents - Sales, pledges, and other dispositions by mercantile agents

302: Pledge of goods as security for existing debt or liability

You could also call this:

“Using goods you don't fully own to pay off a debt you already have”

When a mercantile agent (someone who sells or buys goods for others) uses goods as security for a debt they already owe, the person they owe money to doesn’t get any more rights to the goods than the agent had when they used them as security. This means that the person accepting the goods as security can only claim what the agent could have claimed at that time. It’s like if you borrow your friend’s bike and then try to use it to pay off a debt you owe - the person you owe money to can’t suddenly own the bike, because it wasn’t really yours to give away in the first place.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844646.

Topics:
Business > Fair trading Money and consumer rights > Consumer protection
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301: Effect of pledges of documents of title, or

"Promising papers that prove you own something is like promising the actual thing"

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303: Rights acquired by exchange of goods or documents, or

"Trading goods or papers: What you need to know about swapping stuff"

Part 5 Other commercial matters
Mercantile agents: Sales, pledges, and other dispositions by mercantile agents

302Pledge of goods as security for existing debt or liability

  1. If a mercantile agent pledges goods as security for a debt or liability due from the pledgor to the pledgee before the time of the pledge, the pledgee acquires no further right to the goods than could have been enforced by the pledgor at the time of the pledge.

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