Should individuals be given more protection, asks Fan Yang
If an individual wants to use their existing goods as security for a loan, they need to use two Victorian pieces of legislation: the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882. These complex and archaic statutes leave both borrowers and potential purchasers in a very insecure position. The Law Commission is currently consulting on whether to repeal the Bills of Sale Acts and replace them with a new “Goods Mortgages Act”.
Bills of sale
A bill of sale can be taken over any goods, with examples being fine wine, valuable paintings and even a herd of cows. However, by far the most common example in modern times is the logbook loan.
When a borrower takes out a logbook loan, they transfer ownership of their existing car, van or motorcycle to the lender. If the borrower keeps up the repayments, they may keep using the vehicle. But if the borrower defaults, the lender can seize the vehicle and sell it to recoup the money outstanding under the logbook
