Commercial Law

Front 1

What are the 4 ordinary diligences?

Back 1

(1) Attachment

(2) Arrestment

(3) Inhibition

(4) Adjudication

Front 2

What type of property is attachment used for?

Back 2

Corporeal moveable property.

Front 3

What type of property is arrestment used for?

Back 3

Used over corporeal and incorporeal moveables.

Front 4

What type of property is inhibition used for?

Back 4

Corporeal heritable property.

Front 5

What type of property is adjudication used for?

Back 5

Corporeal heritable property

Front 6

What are money attachments/when are they used?

Back 6

(introduced by Part 8 of the 2007 Act) – a specialform of diligence to attach cash which leads to a payment order(effective transfer of cash from debtor to creditor)

Front 7

What is the general diligence process?

Back 7

(1) individual creditors freeze or seize

(2) individual assets

(3) on a first come first served basis (prior tempore potior jure) If yousnooze you lose

Front 8

What is the general bankruptcy process?

Back 8

(1) procedure is for all creditors;

(2) all assets are taken over and

(3) distribution is (subject to exceptions) on basis of equality. Paritascreditorum

(4) in bankruptcy processes debtor's affairs are wound up bytrustee/liquidator. No such person in diligence.

Front 9

Who carries out diligence?

Back 9

Court officers: sheriff officers or messengers at arms.

Front 10

What is the 'freeze' type of diligence?

Back 10

Inhibition

Front 11

What are the 'seize' types of diligence?

Back 11

Attachment, arrestment and adjudication.

Front 12

What does attachment lead to?

Back 12

Ultimatelyleads to seize and sale the debtor’s property. The proceeds from the sales are then applied bythe creditor towards the repayment of the debts owed by the debtor to thecreditor.

Front 13

After being served with a charge for payment (and a debt advice information package), what is the time period that has to expire, before the creditor takes any steps to execute an attachment?

Back 13

12 weeks.

Front 14

Under 13A of the 2002 Act, what must be given to the debtor immediately after executingan attachment or left atthe place where the attachment was executed?

Back 14

An attachment schedule.

Front 15

What section of the 2002 Act sets out the terms of recovering money by means of attachment?

Back 15

s 10(1) of the 2002 Act.

Front 16

How many parties does arrestment involve and who are they?

Back 16

Involves 3 parties: the creditor/arrestor, thecommon debtor (the debtor of the enforcing creditor) and the debtor of thecommon debtor (the third-party arrestee).

Front 17

Where is the arrestment procedure set out?

Back 17

Arrestment procedure is set out in s 73A of theDebtors (Scotland) Act 1987.

Front 18

What is the limit on the amount that can be arrested?/Where can the limit be found?

Back 18

Under s 73F, the amount arrested cannot exceed the value of the debt owed to thecreditor/arrestor.

Front 19

When are funds that are arrested automatically released from the arrestee to the creditor?

Back 19

After 14 weeks from the service of the decree uponthe common debtor (the debtor) or the date of arrestment in terms of s73J ofthe 1897 Act. However, when an objection is made there is an exception and acourt hearing must take place in accordance with 73R.

Front 20

How can an arrestment be enforced before the 14 week expiry?

Back 20

By an action for furthcoming = aseize diligence.

Front 21

In what situation does multipledoing arise? (Arrestment)

Back 21

Multiplepoinding arises where the holder of afund of money or property is the subject of a number of competing claims fromcreditors.

Front 22

What is the result of the process of multipledoing? (Arrestment)

Back 22

The process enables the arrestee, i.e. the holder of the fund to place matters in the hands of the court. Pre-condition = there have been multiple arrestments of the same funds or property in the hands of the arrestee à court decides how funds should be applied.

Front 23

What does an inhibition cover?

Back 23

It covers the entirety of the debtor’s heritage.

Front 24

When do inhibitions take effect?

Back 24

Inhibitions only take effect once registered inthe Register of Inhibitions ( s 149 of the 2007 Act). However, this is subject to an exception whichis applicable in circumstances where a notice of inhibition is registered inadvance and the inhibition is then registered within 21 days.

Front 25

What are the 3 principle implications of an inhibition?

Back 25

(1) No right to alienate

(2) No power to grant security

(3) Postponement of new creditor

Front 26

What is no right to alienate? (Inhibition)

Back 26

The debtor is precluded from selling oralienating the heritable property which he owns or granting a deed whichaffects the property (s 160 of the 2007 Act). This is subject to an exceptionin s 15 – purchasers in good faith will not be affected by the inhibition.

Front 27

What is no power to grant security? (Inhibition)

Back 27

The debtor is disentitled from granting anysecurity over the heritage.

Front 28

What is postponement of a new creditor? (Inhibition)

Back 28

If a debtor borrows sums subsequent to the dateof inhibition, the new creditor is effectively postponed to the inhibitor withregard to the inhibited debtor’s heritage.

Front 29

What kind of right can the creditor obtain from adjudication?

Back 29

The creditor can obtain a real right in securitywhich allows seizure under the condition that the debtor is ejected first.

Front 30

What can a creditor do by adjudication diligence?

Back 30

It is a seize diligence to the effect that itentitles the creditor to seize the heritage of the debtor and vests the real rightto the heritable property in the creditor.

Front 31

When does the right of seizure take effect?

Back 31

The right of seizure is after 10 years; it is not immediate.

Front 32

What is the authority for the rules on assets kept in a dwellinghouse?

Back 32

Pt 3 s45-48 2002 Act).

Front 33

What is the exception to the rule that an attachment cannot be taken out on assets in a dwellinghouse and where are the requirements set out?

Back 33

Exception to the exception is with anexceptional attachment order. Requirements for this are in s 48 which says the creditor has to have attempted to execute other forms of diligence and it has to be attached to non-essentials.

Front 34

What is the rule on property kept in a garage in relation to the dwellinghouse?

Back 34

S 45 – the garage is considered outside thedwelling house thus property in a garage is not protected by the dwellinghose exception.

Front 35

Will diligence take priority over a real right?

Back 35

It depends when it was created; a real right created before diligence will takepriority over diligence. E.g. In this example, if an adjudication wastaken out (right to evict) in this instance, not possible as they already havea real right in land.

Front 36

Will a personal right take priority over diligence?

Back 36

No, with personal rights, diligence takes priority.

Front 37

Where do trusts (personal right) stand against diligence?

Back 37

A trust takes priority as long as it is established before thediligence. Refer to case of Burnett's Trustee v Grainger.