1.2 NATURE OF LIENS
Here, we shall go in-depth into the liens proper and try to understand the interest.
Lien arises to fulfil the obligation which a party to a transaction has failed to fulfil upon the fulfilment of the other party’s obligation. For example, in a conveyance of land, there is an obligation on the part of vendor to convey a good title to the purchaser in return for an obligation on the part of the purchaser to pay the purchase price. Breach by any of the parties will give rise to an equitable lien, outside the express or implied contract of the parties to the transaction. Thus, in Barclays Bank Plc v. Estates & Commercial Ltd (1997) WLR @ pg 415 it was decided that a vendor of land who has conveyed the land to the purchaser has in equity, a lien upon the property for unpaid purchase money. Conversely, a lien will also arise in favour of a purchaser who has made a full or part payment of the purchase price by way of deposit but who has not obtained a conveyance of the property.
We have earlier gone through the preliminary issues of the concept of security and the classification of security. It then becomes pertinent to examine the various security interests applicable in security transactions.
A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt. We have four traditional security interests:
The above four interests are inter-related and may crisscross with one another or crystallise into another.
A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation.
To create a valid lien, it is essential:
- That the party to whom or by whom it is acquired should have the absolute property or ownership of the thing or, at least, a right to vest it;
- That the party claiming the lien should have an actual or constructive, possession, with the assent of the party against whom the claim is made;
- That the lien should arise upon an agreement, express or implied and not be for a limited or specific purpose inconsistent with the express terms or the clear, intent of the contract; e.g., when goods are deposited to be delivered to a third person or to be transported to another place.
We shall examine the other forms of security interests subsequently.For additional reading, read the material found on: https://www.deepdyve.com/lp/de-gruyter/a-step-forward-in-the-harmonization-of-european-jurisdiction-Jo5YDwWL1r?articleList=%2Fsearch%3Fquery%3Dbrussels%2BI