Bankruptcy and Insolvency Act

Version of section 81.1 from 2002-12-31 to 2009-09-17:


Marginal note:Right of unpaid supplier to repossess goods

  •  (1) Subject to this section, where a person (in this section referred to as the "supplier") has sold and delivered goods to another person (in this section referred to as the "purchaser") for use in relation to the purchaser’s business, and the purchaser has not fully paid for the goods, the supplier may have access to and repossess the goods at the supplier’s own expense, and the purchaser, trustee or receiver shall release the goods, if

    • (a) the supplier presents a written demand for repossession to the purchaser, trustee or receiver, in prescribed form and containing the details of the transaction, within a period of thirty days after the delivery of the goods to the purchaser;

    • (b) at the time when the demand referred to in paragraph (a) is presented,

      • (i) the purchaser is bankrupt, or

      • (ii) there is a receiver, within the meaning of subsection 243(2), in relation to the purchaser;

    • (c) at the time when the demand referred to in paragraph (a) is presented, the goods

      • (i) are in the possession of the purchaser, trustee or receiver,

      • (ii) are identifiable as the goods delivered by the supplier and not fully paid for,

      • (iii) are in the same state as they were on delivery,

      • (iv) have not been resold at arms' length, and

      • (v) are not subject to any agreement for sale at arms' length; and

    • (d) the purchaser, trustee or receiver does not, forthwith after the demand referred to in paragraph (a) is presented, pay to the supplier the entire balance owing.

  • Marginal note:Where goods have been partly paid for

    (2) Where, at the time when the demand referred to in paragraph (1)(a) is presented, the goods have been partly paid for, the supplier’s right to repossess under subsection (1) shall be read as a right

    • (a) to repossess a portion of the goods proportional to the unpaid amount; or

    • (b) to repossess all of the goods on paying to the purchaser, trustee or receiver an amount equal to the partial payment previously made to the supplier.

  • (3) [Repealed, 1999, c. 31, s. 23]

  • Marginal note:Where notice of intention or proposal is filed

    (4) Where a notice of intention under section 50.4 or a proposal was filed in respect of the purchaser after the delivery of the goods to the purchaser and before there was a receiver, within the meaning of subsection 243(2), in relation to the purchaser or the purchaser became bankrupt, the period between

    • (a) the earlier of the filing of the notice of intention or proposal, and

    • (b) the earlier of the first day there was a receiver, within the meaning of subsection 243(2), in relation to the purchaser or the day the purchaser became bankrupt

    shall not be counted in determining the end of the thirty day period referred to in paragraph (1)(a).

  • Marginal note:Expiration of supplier’s right

    (5) A supplier’s right to repossess goods pursuant to this section expires if not exercised within ten days after the purchaser, trustee or receiver presents the supplier with a written notice admitting that right, unless the ten day period is extended by mutual agreement.

  • Marginal note:Ranks above other claims

    (6) Notwithstanding any other federal or provincial Act or law, a supplier’s right to repossess goods pursuant to this section ranks above every other claim or right against the purchaser in respect of those goods, other than the right of a bona fide subsequent purchaser of the goods for value without notice that the supplier had demanded repossession of the goods.

  • Marginal note:Application to court for directions

    (7) The purchaser, trustee or receiver may apply to the court for directions in relation to any matter relating to this section, and the court shall give, in writing, such directions, if any, as it considers proper in the circumstances.

  • Marginal note:Supplier may appeal to court

    (8) Where a supplier is aggrieved by any act, omission or decision of the purchaser, trustee or receiver, the supplier may apply to the court and the court may make such order as it considers proper in the circumstances.

  • Marginal note:Other rights saved

    (9) Nothing in subsection (7) or (8) precludes a person from exercising any right that the person may have under subsection 34(1) or section 37.

  • Marginal note:No payment

    (10) A supplier who repossesses goods pursuant to this section is not entitled to be paid for those goods.

  • Marginal note:Provincial rights saved

    (11) Nothing in this section precludes a supplier from exercising any right that the supplier may have under the law of a province.

  • 1992, c. 27, s. 38
  • 1999, c. 31, s. 23
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