Credit and Security Law

LLAW/JDOC6002

Jason Fu

Faculty of Law
University of Hong Kong

2nd Semester, 2023-2024

Saturdays, 10:30 a.m. – 1:30 p.m. (Room CPD-2.42)

Introduction

This course will examine how money is raised by borrowing; different methods of securing
debt obligations; and legal means of creditors taking contractual protection.

The forms of credit and security are divided into the “real” security and the “quasi-security”.
The real securities are charges, mortgages, pledges, and common law liens. The quasi-
securities include hire-purchase, sales and repurchase, finance leases, and retention of title
transactions. All of these forms of security are available to corporate borrowers as well as
consumers. A common corporate loan is a charge over book debts; a common consumer loan
transaction is a mortgage over land.

In addition to security and quasi-security, creditors can obtain various contractual protection
against the debtors and third parties, including a guarantee, indemnity, right of set-off, flawed
asset arrangement, or subordination.

The course also examines the conflicts of interests between shareholders and creditors, and
the legal doctrines to resolve them. Technical issues will be placed in their business context.

Topics include the following:

 types of business finance;

 contractual creditor protection;
 proprietary creditor protection, the concept of security;
 multiple lenders;
 transferred of debts;
 insolvency; and
 remedies.

First class, last class, assessment date

First class: 27 January 2024

Last class: 27 April 2024
Assessment due: 15 May 2024 (5:00 pm)

1
Main textbooks

Gullifer and Payne, Corporate Finance Law: Principles and Policy (3rd ed., 2020)
(Bloomsbury Publishing)

Gullifer, Goode and Gullifer on Legal Problems of Credit and Security (7th ed., 2023) (Sweet
& Maxwell)

Fuller, Corporate Borrowing: Law and Practice (5th ed., 2016) (Jordan Publishing)

Additional textbooks

Andrews and Millett, Law of Guarantees (7th ed., 2015) (Sweet and Maxwell)

Beale et. al., The Law of Security and Title-Based Financing (3rd ed., 2018) (Oxford
University Press)

Benjamin, Financial Law (2007) (Oxford University Press)

Bridge et al., The Law of Personal Property (3rd ed., 2022) (Sweet and Maxwell)

Goode on Payment Obligations in Commercial and Financial Transactions (4th ed., 2020)
(Sweet & Maxwell)

Gower and Davies Principles of Modern Company Law (11th ed., 2021) (Sweet and Maxwell)

Hudson, The Law of Finance (2nd ed., 2013) (Sweet & Maxwell)

Mckendrick, Goode & McKendrick on Commercial Law (6th ed., 2020) (LexisNexis)

Proctor, Mann on the Legal Aspect of Money (7th ed., 2012) (Oxford University Press)

Assessment

The assessment will consist of oral presentation (30%), written submission (50%) of the same
set of questions, and class participation (20%). The presentation will assess students’
understanding of the issues involved, which will also help them in their written submissions.

2
 Syllabus

Class 1 Legal concepts in private and financial law

Sat 27 Jan

Class 2 Lending: law and practice

Sat 3 Feb

Class 3 Contractual creditor protection

Sat 17 Feb

Class 4 Proprietary creditor protection: security and other interests

Sat 24 Feb

Class 5 Proprietary creditor protection: fixed and floating charges

Sat 2 Mar

Class 6 Multiple lending and transfer of debts

Sat 23 Mar

Class 7 Seminar
Sat 6 Apr

Class 8 Presentation assessment

Sat 13 Apr

Class 9 Presentation assessment

Sat 20 Apr

Class 10 Presentation assessment

Sat 27 Apr

*Class 11 Presentation assessment

Sat 27 Apr (2:30 pm
– 5:30 pm) (CPD-
2.37)

15 May 2024 (5:00 Assessment due

pm)