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Collateral Contract for Canada

Collateral Contract Template for Canada

A Canadian collateral contract is a legally binding agreement that creates a security interest in specific assets or property to secure the performance of obligations or repayment of debt. This document, governed by provincial Personal Property Security Act (PPSA) legislation (or the Civil Code in Quebec), establishes the terms and conditions under which the collateral is pledged, including detailed descriptions of the secured assets, rights and obligations of both parties, default provisions, and enforcement mechanisms. The agreement must comply with specific Canadian legal requirements for creating and perfecting security interests, including proper registration under the applicable provincial PPSA registry system.

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Collateral Contract

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What is a Collateral Contract?

The Collateral Contract serves as a crucial document in Canadian secured lending and security arrangements, establishing legally enforceable security interests in various types of assets. This agreement is essential when parties need to create a security interest in personal property, equipment, inventory, or other assets to secure obligations or debts. It must comply with the Personal Property Security Act (PPSA) in common law provinces or the Civil Code in Quebec, including specific requirements for collateral description, perfection through registration, and enforcement mechanisms. The document is commonly used in commercial lending, equipment financing, asset-based lending, and various other business transactions where security interests need to be established and protected. Its proper execution and registration are critical for securing priority rights and ensuring enforceability in case of default.

What sections should be included in a Collateral Contract?

1. Parties: Identification of the secured party and the debtor, including full legal names and addresses

2. Background: Context of the security arrangement, reference to any principal agreements, and the purpose of the collateral contract

3. Definitions: Definitions of key terms used throughout the agreement, including specific PPSA-related terminology

4. Grant of Security Interest: Express provision creating the security interest in favor of the secured party

5. Description of Collateral: Detailed description of the collateral that meets PPSA requirements for enforceability

6. Representations and Warranties: Debtor's confirmations regarding ownership, authority, and status of the collateral

7. Covenants: Ongoing obligations of the debtor regarding maintenance, insurance, and use of the collateral

8. Default Events: Comprehensive list of events that constitute default under the agreement

9. Remedies: Rights and remedies of the secured party upon default, including PPSA remedies

10. Further Assurances: Obligation to execute additional documents and take actions to perfect the security interest

11. Notices: Protocol for giving notices under the agreement

12. Governing Law: Specification of applicable Canadian province and laws governing the agreement

What sections are optional to include in a Collateral Contract?

1. Priority Arrangements: Required when there are multiple secured parties and priority needs to be established

2. Insurance Requirements: Detailed insurance obligations when the collateral requires specific insurance coverage

3. Special Rights: Used when the secured party needs specific rights such as inspection or monitoring

4. Cross-Default Provisions: When the collateral contract needs to be linked to other agreements

5. Foreign Registration: Required when collateral may be moved across jurisdictions

6. Consumer Protection Provisions: Required when the collateral involves consumer goods

7. PPSA Registration Details: When specific PPSA registration requirements need to be documented

8. Subordination Terms: When other security interests need to be subordinated

What schedules should be included in a Collateral Contract?

1. Schedule A - Collateral Description: Detailed technical or legal description of all collateral covered

2. Schedule B - Permitted Encumbrances: List of pre-existing or permitted liens and encumbrances on the collateral

3. Schedule C - Location of Collateral: Specified locations where collateral is or will be kept

4. Schedule D - Serial Numbered Goods: Serial numbers and specific descriptions for items requiring serial number registration

5. Appendix 1 - Related Agreements: Copies or references to related agreements affecting the collateral

6. Appendix 2 - Insurance Certificates: Copies of required insurance documentation

7. Appendix 3 - PPSA Search Results: Results of PPSA searches showing existing registrations

8. Appendix 4 - Registration Forms: Copies of PPSA registration forms or statements

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions












































Clauses



































Relevant Industries

Banking & Financial Services

Manufacturing

Real Estate

Equipment Leasing

Agriculture

Automotive

Construction

Retail

Technology

Transportation & Logistics

Mining & Resources

Healthcare

Professional Services

Relevant Teams

Legal

Finance

Credit & Collections

Risk Management

Treasury

Compliance

Commercial Lending

Security Administration

Contract Management

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Corporate Lawyer

Legal Counsel

Credit Manager

Risk Manager

Commercial Lending Officer

Security Registration Specialist

Compliance Officer

Treasury Manager

Contract Administrator

Asset Manager

Collections Manager

Business Development Manager

Financial Analyst

Industries








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