1 The Secured Transactions Reform Project (a project dedicated to the reform of English secured transactions law) tracks countries that have undertaken such reform. For a list of these countries, see: <http://securedtransactionslawreformproject.org/reform-in-other-jurisdictions/> (last accessed 14 December 2016).

2 For instance, Ron Cuming points out that, in Canada, the reform of personal property security law was not informed by demands for change by the finance industry or the commercial bar. Rather, it resulted from the conclusions of “a few practitioners, academics and government officials that modernization of this area of Canadian commercial law would produce significant benefits for many Canadians” (emphasis added). See Cuming, R “Personal property security law in Canada: The revolution is nearly complete” (1998) 72 Australian Law Journal 918 Google Scholar at 918. In contrast is the case in the UK, where practitioners have been said to be more or less indifferent to proposed amendments to the extant secured transactions law regime, reinforcing the English law maxim “if it isn't broken, don't fix it”. See McCormack, G “Pressured by the paradigm: The Law Commission and the company security interests” in Lacy, J The Reform of UK Personal Property Security Law: Comparative Perspectives (2010, Routledge Cavendish) 83 Google Scholar at 83.

3 See Kozolchyk, B “Secured lending and its poverty reduction effect” (2007) 42 Texas International Law Journal 727 Google Scholar at 728, where, citing statistical data from Albania, Brazil, Mexico and Romania, the author argues that reform in secured transactions law reduced interest rates by a significant percentage. Similarly, in H Fleisig et al Reforming Collateral Laws to Expand Access to Finance (1st ed, 2006, World Bank / International Finance Corporation) at 6, the authors essentially argue that the lack of a reformed secured transactions law framework has made lenders in low and middle income countries unwilling to accept available assets (mainly personal property) as collateral. It is in response to this precarious challenge that the UN Commission for International Trade Law (UNCITRAL) seeks to “assist States in developing modern secured transactions laws … with a view to promoting the availability of secured credit”. See “UNCITRAL legislative guide on secured transactions”, available at: <https:// www.uncitral.org/pdf/english/texts/security-lg/e/09-82670_Ebook-Guide_09-04-10English.pdf> (last accessed 14 December 2016).

4 See generally Arruñada, B “Pitfalls to avoid when measuring institutions: Is Doing Business damaging business?” (2007) 35 Journal of Comparative Economics 729 CrossRefGoogle Scholar.

5 In their research involving 12 countries in Central and Eastern Europe, Haselmann and Pistor found that, following changes in their secured transactions laws, foreign banks entering the system tend to extend their credit volume. See Haselmann, R, Pistor, K and Vig, V “How law affects lending” (2010) 23/2 Review of Financial Studies 549 Google Scholar, available at: <http://rfs.oxfordjournals.org/content/23/2/549.full.pdf+html> (last accessed 14 December 2016).

6 See Tajti, T “The law-finance-technology nexus in the 21st century: Is there a need to rethink the limits of law?” (2015) 37 Journal of the Corvinus University of Budapest 427 Google Scholar at 471, available at: <https://www.researchgate.net/publication/291361402_The_law-finance-Technology_nexus_in_the_21st_Century_Is_there_a_need_to_rethink_the_limits_of_law> (last accessed 14 December 2016). The author argues that justice in commerce should be about predictability of the market, enabling market participants to plan their economic activities. In his view this is a vital ingredient for any economy's development.

7 Saunders, A et al. “The economic implications of international secured transactions law reform: A case study” (1999) 20 University of Pennsylvania Journal of International Economic Law 309 Google Scholar at 311.

8 Before 2014, South Africa's economy was the largest in Africa. According to World Bank data, its Gross Domestic Product (GDP) as at 2014 stood at USD 350.1 billion; see: <http://data.worldbank.org/country/south-africa> (last accessed 14 December 2016). However, Nigeria's economy overtook South Africa's following the rebasing of the former's economy in the same year to account for sectors such as telecommunications, airlines and movie production. According to World Bank data, Nigeria's GDP currently stands at USD 481 billion; see: <http://data.worldbank.org/country/nigeria> (last accessed 14 December 2016). See also “Nigeria becomes Africa's biggest economy” (6 April 2014) BBC News, available at <http://www.bbc.com/news/business-26913497> (last accessed 14 December 2016).

9 As pointed out by H Fleisig et al, before 2006, an estimated 99% of items of movable property accepted in the USA as security would be unacceptable to creditors in Nigeria. See Fleisig, H et al. Reforming Collateral Laws to Expand Access to Finance (1st ed, 2006, World Bank / International Finance Corporation) at 7CrossRefGoogle Scholar.

10 As suggested in a report by the Consultative Group to Assist the Poor and the World Bank, decisions by commercial banks to lend to SMEs in Nigeria are driven by the Central Bank of Nigeria regulatory requirement for collateral from the SMEs, the expected transaction costs to be incurred by the banks in establishing and enforcing property rights, ease in the resolution of insolvency (liquidation) and the standing of the bank as against other creditors in an insolvency. The report titled “Access to finance in Nigeria: Microfinance, branchless banking, and SME finance” is available at: <https://www.cgap.org/sites/default/files/CGAP-Access-to-Finance-in-Nigeria-Microfinance-Branchless-Banking-and-SME-Finance-Jan-2009.pdf> (last accessed 14 December 2016).

11 As economists have shown, credit rationing is caused by the problems of adverse selection, moral hazards as well as uninsurable risks; essentially, the availability of collateral / security solves this problem as it mitigates the problem of information asymmetry with which lenders are faced. See generally Stiglitz, J “Credit rationing in markets with imperfect information” (1981) 71 American Economic Review 393 Google Scholar; and Steijvers, T and Voordeckers, W “Collateral and credit rationing: A review of recent empirical studies as a guide for future research” (2009) 23/5 Journal of Economic Surveys 924 CrossRefGoogle Scholar at 926. For a brilliant summary of the legal arguments for security / collateral as against mere contractual claims, see McCormack, G “UNCITRAL, security rights and the globalisation of the US article 9” (2011) 62 Northern Ireland Legal Quarterly 485 Google Scholar at 488.

12 See CBN “₦200 billion intervention fund for re-financing and restructuring of banks’ loans to the manufacturing sector: Central Bank of Nigeria guidelines”, available at: <http://www.cenbank.org/Out/2010/publications/guidelines/dfd/GUIDELINES%20ON%20N200%20BILLION%20REFINANCING%20MANUFACTCTURING.pdf> (last accessed 14 December 2016).

13 “We can't access government loans: SME operators” (14 February 2015) Business News, available at: <http://businessnews.com.ng/2015/02/14/cant-access-govenment-loans-sme-operators/> (last accessed 14 December 2016).

14 “Small firms may secure loans with vehicles, bikes” (28 September 2015) Business News, available at: <http://businessnews.com.ng/2015/09/28/small-firms-may-secure-loans-with-vehicles-bikes/> (last accessed 6 January 2016). The title of the report may be misleading as it only tells part of the story, as further analysis shows below.

15 Federal Republic of Nigeria Official Gazette no 12, vol 102 (on file with the authors).

16 See the commencement section of the Regulation.

17 See Tajti, T “Testing the equivalence of the new comprehensive Australian Personal Property Securities Act, its segmented European equivalents and the draft common frame of reference” (2012) 24 Bond Law Review 85 Google Scholar, in which (at 85) the author ascribes the Australian reform to the global move towards rethinking the “unsystematized” and thus “less predictable and uncompetitive” laws in the area of secured transactions.

18 The various common law provinces of Canada from 1967 to 1996, New Zealand in 1999, Ghana in 2008, Australia in 2009, Liberia in 2010, Malawi in 2013 and Sierra Leone in 2014. Similarly, other countries in continental Europe and in South America have reformed or are in the process of reforming their secured transactions law through the lens of UCC, art 9, aided by the World Bank Group – Center for the Economic Analysis of Law. See the list of countries at: <http://www.ceal.org/draftlaw.asp> (last accessed 14 December 2016).

19 For an in-depth analysis of security interest creation under English law (England and Wales), see Moonen, R and Truiden, S (eds) Bank Securities and Other Credit Enhancement Methods (1st ed, 1995, Kluwer Law International) at 131Google Scholar. On English personal property law, on which Nigeria's law is substantially based, see further: Goode, R Commercial Law (4th ed, 2010, Penguin Books)Google Scholar, part IV; Wood, P Comparative Law of Security Interests and Title Finance (2nd ed, 2007, Sweet & Maxwell)Google Scholar, part 3; and Tajti, T Comparative Secured Transactions Law (2002, Akademiai Kiado) at 233–56Google Scholar. Given the opinion of the peer reviewers of this article on the age of sources, even though these books were published in the first decade of the 21st century, English law has barely changed on the issues under discussion since their publication. The distinguishing feature is that security devices and retention of title devices remain distinct in the English compartmentalized system, as does the distinct notification-based receivables financing, enshrined in Dearle v Hull [1823] 3 Russ 1, as a method of perfection. See generally Oditah, F Legal Aspects of Receivable Financing (1998, Sweet & Maxwell)Google Scholar at 32.

20 For an inimitable analysis of the impact of behavioural science in policy making (although with a bias for EU law), see generally Alemanno, A and Sibony, A (eds) Nudge and the Law: A European Perspective (2015, Hart Publishing)Google Scholar. The authors thank Prof Tibor Tajti for bringing their attention to this recent book.

21 In the UK for instance, where secured transactions law reforms are being seriously considered, consultations have been ongoing with the purpose of determining, among other things, the scope of the reforms, and implications for other areas of law and for stakeholders. See for instance City of London Law Society “Discussion paper: Secured transactions reform” (November 2012), available at: <http://www.citysolicitors.org.uk/attachments/article/121/20121120-Secured-Transactions-Reform---discussion-paper.pdf> (last accessed 14 December 2016). See also the Secured Transactions Law Reform Project at: <http://securedtransactionslawreformproject.org/> (last accessed 14 December 2016).

22 See Tajti, T Comparative Secured Transactions Law (1st ed, 2002, Akademiai Kiado) at 400Google Scholar. The author identified the building blocks of secured transactions law under UCC art 9 as: the unitary concept of security interest; the public notice filing and perfection system; the concept of floating lien with its inseparable companion the concept of purchase money security (acquisition finance); a complex system of priorities (instead of the single first to register, first in rights); the cumulative enforcement system; and the complementarity role with other fields of law (in particular, insolvency and consumer protection).

23 The leading models are UCC art 9 in the United States, the Australian Personal Property Security Act (PPSA), the various Canadian PPSAs and New Zealand's PPSA. The “UNCITRAL legislative guide” (above at note 3), although a soft law, has been inspiring secured transactions law reform in many countries across the globe as stated by Spiros Bazinas, one of the principal drafters of this model law. See O Michele “Spiros V Bazinas: Moving international secured transactions law forward” (2010) 66 Secured Lender 64 at 67, available at: <https:// www.highbeam.com/doc/1P3-2108923791.html> (last accessed 14 December 2016).

24 By its art 9-109(a)(1) and its official comment 2, the US UCC takes a substance-over-form approach, deeming a security interest to exist when it appears in function, regardless of the form it takes. The Regulation adopted a similar “functional approach”; see sec 2 on the definitions of “security interest” and “security agreement”. In this article, “functional approach” is used to describe a kind of secured transactions law under which the name given to an agreement does not matter; instead, what is important is whether a security interest was created in the debtor's personal property collateral in exchange for credit.

25 Many commercial transactions that take place in Nigeria follow imported concepts from countries where these concepts are well governed by detailed secured transactions law. For instance, apart from the floating charge, no security device exists in Nigeria for natural persons to create security interests in a debtor's after-acquired property. Similarly, due to the lack of a national electronic registry to publicize security interests in personal property, there is a substantial problem of ostensible ownership.

26 Hire purchase, conditional sale, equipment leasing, consignment, and so on, are the title financing devices that exist in Nigeria; each has its own set of governing rules with respect to creation, perfection and enforcement. This makes the commercial arena highly unpredictable for secured creditors, especially in the context of a debtor's bankruptcy.

27 There is no insolvency legislation for corporate debtors in Nigeria. The closest provisions are the anaemic winding up procedures in the Companies and Allied Matters Act (CAMA), which are insufficient to tackle current commercial realities. See CAMA, part XV, available at: <http://www.nigeria-law.org/CompaniesAndAlliedMattersActPartXV-XVII.htm#Winding%20up%20of%20Companies> (last accessed 14 December 2016).

28 The key challenges are the “unsuitable” nature of personal property collateral due to a lack of defined rules for its creation, perfection, priority and enforcement. The lack of a personal property registry where security interests in personal property collateral are registered has contributed in lenders’ apathy towards accepting them as collateral.

29 There is a Bankruptcy Act of 1990 for individual debtors, modelled after its English counterpart, although it is now in need of reform.

30 For case law proof of the slow judicial system in Nigeria, see Bokini v John Holt & Co Ltd [1937] 13 NLR 109; this case concerned a real mortgage transaction and lasted seven years. In Bank of the North v Muri [1998] 2 NWLR (pt 536) 153, a case on a real mortgage transaction took ten years to move from the High Court to the Court of Appeals. In Ojikutu v Agbonmagbe Bank Ltd (now known as Wema Bank Plc) [1996] 2 Afr LR (comm) 433, another matter concerning a real mortgage transaction lasted 11 years.

31 See UCC, art 9-609 and the Regulation, sec 35. For a good understanding of enforcement after a debtor's default, see Harris, C and Burgess, W “Perfection and enforcement of security interests under article 9” (1991) 70 Michigan Bar Journal 306 Google Scholar at 308.

32 White, J and Robert, S Uniform Commercial Code (6th ed, 2010, West)Google Scholar, chap 25 entitled “Priority conflicts”. See also Kanda, H and Levmore, S “Symposium on the revision of article 9 of the Uniform Commercial Code: Explaining creditor priorities” (1994) 80 Virginia Law Review 2103Google Scholar at 2108–51.

33 Self-help repossession was vehemently condemned in Ellochim Nigeria Ltd and Others v Mbadiwe [1986] NWLR (pt 14) 47 at 165, where the court said: “It is no doubt annoying, and more often than not, frustrating, for a landlord to watch helplessly his property in the hands of an intransigent tenant who is paying too little for his holding, or is irregular in his payment of rents or is otherwise an unsuitable tenant for the property. The temptation is very strong for the landlord to simply walk into the property and retake immediate possession. But that is precisely what the law forbids.” See Ojukwu v Military Governor of Lagos Sate [1985] 2 NWLR (pt 110) 806, which condemned repossession via self-help. See also the Supreme Court decision in Civil Design Construction Nigeria Ltd v SCOA Nigeria Ltd [2007] 6 NWLR (pt 1030) at 300, where Justice Onnoghen, delivering the lead judgment, expressed his strong disapproval of the use of self-help to recover possession, when he decried: “even under the common law, if it were to apply to the facts of this case, which I do not concede, the respondent cannot seize or repossess the rig without recourse to the court” (emphasis added). However, in Umeobi v Otukoya [1978] All NLR 140 and Awojugbagbe Light Industry Ltd v Chinukwe [1995] 5 NWLR (pt 390) 409, the courts exalted the use of self-help in the repossession of collateral. In the authors’ opinion, the ratio decidendi in Umeobi and Awojugbagbe with respect to repossession of collateral should be the way forward, considering the new secured transactions law, although with some statutory regulations to stymie the possible overreaches of secured creditors against debtors.

34 Until the emergence of the collateral registry under the Regulation, there was no collateral registry where security interests in personal property were registered. Even now, the extant collateral registry does not fully solve the problem, given the fact that only banks and financial institutions can use it to publicize their security interests in personal property collateral. On the problem of ostensible ownership, see the seminal article by Charles, M Jr “The mystery and myth of ‘ostensible ownership’ and art 9 filing: A critique of proposals to extend filing requirements to leases” (1988) 39 Alabama Law Review 683 Google Scholar at 725–63.

35 See Stacy, S “Follow the leader? The utility of UNCITRAL's legislative guide on secured transactions for developing countries (and its call for harmonization)” (2014) 49 Texas International Law Journal 35 Google Scholar at 47–52. The author remarks that, “a common trend among firms in the developing world is that credit applications are rejected due to insufficient collateral. Often, business owners refrain from applying for loans because they are confident that they cannot meet the collateral requirements requested by banks. According to the World Bank and IFC, unavailability of collateral is not always the problem; rather, the problem may be the inability of debtors to utilize valuable assets as collateral. For example, laws may exclude goods not yet acquired by a debtor (eg the future crops of a farmer), a debtor's rights to payment (eg a business's accounts receivable), other intangible property rights (eg copyright), and sometimes even immovable goods (eg large equipment or machinery)”.

36 Small and Medium Enterprises Development Agency of Nigeria “SMEDAN and National Bureau of Statistics collaborative survey: Selected findings (2013)” at 5–6. According to this detailed report, “a total number of 36,994,578 workers are engaged in the micro enterprises”. It also found at the end of the survey period, ie 2013, that: “The MSMEs contributed 48.47 per cent to Nigeria's GDP in nominal terms.” The report is available at: <http://nigerianstat.gov.ng/pdfuploads/SMEDAN%202013_Selected%20Tables.pdf> (last accessed 6 January 2016).

37 See CBN Act 2007, sec 51.

38 See Banks and Other Financial Institutions Act, sec 57, chap B3 Laws of the Federation of Nigeria, 2004 (as amended), which states that “the Governor may make regulations, published in the Federal Gazette, to give full effect to the objects and objectives of this Act. Without prejudice to the provisions of subsection (1) of this section, the Governor may make rules and regulations for the operation and control of all institutions under the supervision of the Bank.”

39 The Regulation uses similar building blocks of UCC art 9 with respect to the creation, perfection, priority and enforcement of security interests on a debtor's personal property collateral. It also adopted the “functional approach” to secured transactions with respect to a debtor's personal property collateral, although it does not apply to non-bank creditors in Nigeria. See the Regulation, sec 2 on the definitions of “security interest”, “security agreement” and “secured creditor”.

40 See the Regulation, sec 6. See also UCC, arts 9-203 and 1-204 for the meaning of “value”. In general, the secured creditor must have to give value, the debtor must have rights in the collateral subject of the security interest, and there must be a security agreement which describes the collateral and is signed or authenticated by the debtor.

41 In contrast with UCC, art 9-203, the Regulation does not make mention of “value” as a precondition for a valid security agreement; see the Regulation, secs 4–8 dealing with “creation of security interest” in personal property. The giving of “value” has long been settled as a compulsory requirement for an enforceable security interest. See Weise, S “UCC article 9: Personal property secured transactions” (2007) 62 Business Lawyer 1633 Google Scholar at 1636.

42 The following recent cases demonstrate how US courts have consistently interpreted UCC, art 9-203, which outlines the requirements for creating an enforceable security interest in a debtor's collateral (the debtor must sign or authenticate the security agreement). In In re Burival 72 UCC2d 742 [Bank D Neb 2010], the creditor's security agreement was deemed invalid because only the creditor (not the debtor as well) signed the agreement. This was also the court's position in In re Jojo's 10 Restaurant LLC 74 UCC Rep Serv 2d 441 [Bankr D Mass 2011], holding that the debtor must own or have rights in the collateral; In re WL Homes LLC 78 UCC Rep Serv 2d 417 [D Del 2012], in which the court found that the debtor did not have sufficient use, right and control in the collateral, holding that the debtor's grant of security interest in them was invalid. A similar decision was also reached in Banner Bank v First Community Bank 76 UCC Rep Serv 2d 919 (D Mont 2012), holding that the debtor's collateral has to be described in a security agreement. The description has to be generic and not a detailed description of each and every property under encumbrance, although this requirement could be excused where the secured party possesses the collateral; see Caterpillar Financial Services Corp v Peoples National Bank NA 80 UCC Rep Serv 2d 53 (7th cir 2013). Closely linked to this is the “composite document rule” that states that a court could read a series of documents and recognize them as one; see In re Bucala 76 UCC Rep Serv 2d 691 (Bankr SD NY 2012), holding that the secured party must give value for encumbering the debtor's collateral. Giving value could be in the form of lending money (In re Martin 23 UCC2d 605, Bankr D Or 1994), the debtor's pre-existing financial obligation to the secured party (Ford Motor Credit Co v State Bank & Trust Co 13 UCC2d 548 Miss 1990), the secured party's forbearance (In re Recker 27 UCC2d 1434 ED Mo1995) or debt forgiveness (Magee v All Terrain Contractors, Inc 31 UCC2d 581 1996). For a complete treatment, see White, J and Summers, R Uniform Commercial Code (6th ed, 2010, West Publishing Co, Practitioner Treatise Series, vol 4)Google Scholar at 141. The essence of outlining these cases is to provide adequate guidance to Nigerian judges who will soon face similar challenges regarding the interpretation of the requirements for creating a valid and enforceable security agreement from the perspective of the Regulation or a similar law in the future.

43 See KAOP Company v Midway National Bank 372 NW2d 774 [Minn Ct App 1985], where the court rendered invalid a security agreement that was devoid of value. A similar holding was also reached in Queen of the North, Inc v LeGrue 582 P 2d 144 at 148 [Alaska 1978]. Also see the relevant cases on “value” in note 42 above. From the Australian perspective, which also makes the giving of “value” a precondition for the enforcement of a security agreement, see Moore, N and Black, J “Australian secured creditor and insolvency law: Sweeping changes under new personal property securities regime” (2011) 30 American Bankruptcy Institute Journal 54 Google Scholar at 55.

44 To be enforceable, a contract must either be supported by “deed” or “consideration”; see Moschi v Lep Air Services Ltd [1973] AC 331 at 346. Also, Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 at 855 stated that consideration is “an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable”. Similarly, see the New Zealand Court of Appeal in Melmerley Investments Ltd v McGarry [2001] CA141/01 at 21, where the court stated that “a Court is concerned only with the presence of consideration and does not make an assessment of the comparative value of the acts or promises of the parties towards one another”. For a similar holding on the key role of “consideration” in determining an enforceable contract, see Akrnzua II Oba of Benin v Benin Divisional Council [1957] WRNLR 1.

45 Considering that a security agreement stemming from the Regulation is a contract, such security agreements would have to be tested by the time honoured rule of “consideration” and, where they do not fit the long line of landmark cases establishing the doctrine of consideration (Bank of West Africa v Fagboyegun [1961] WNLR 227; Barclays Bank of Nigeria Ltd v Okotie-Eboh and Others [1972] NCLR 174; Ikomi v Bank of West Africa [1965] ALR comm 25; and Gbadamosi v Mbadiwe [1964] 2 All NLR 19), the Nigerian courts would not hesitate to render such agreements unenforceable, against the secured party who has not provided “consideration”.

46 See the definition of a “secured creditor” in UCC, art 9, Canadian PPSAs, Australian PPSA, New Zealand PPSA, the “UNCITRAL legislative guide”, book IX of the Draft Common Frame of Reference, the European Bank for Reconstruction and Development principles of secured transactions, and so on. In all of these legal frameworks, the definition of a “secured creditor” includes both natural and legal persons.

47 See the Regulation, sec 2, which defines a “secured creditor” as “a financial institution in whose favour a security interest is created and includes a chargee under any type of charge, chattel mortgagee or holder of any type of consensual lien”.

48 As the Regulation only applies to banks and financial institution creditors and because non-bank secured creditors cannot use the Regulation or its collateral registry to publicize their security interests in a debtor's personal property collateral, banks are almost the only ones in a favourable position to lend to debtors with personal property collateral. This would no doubt lead banks to overreach and it is very possible that they would offer high lending rates, given their situational monopoly, especially considering the dearth of regulations regarding financial contracts in Nigeria. In truth, there are many natural persons in Nigeria, especially in rural areas, who give funds to MSMEs to start businesses, engage in retained title financing contracts with debtors and need to register their security interests to avoid ostensible ownership problems. Sadly, the Regulation cuts them off, thereby shrinking access to credit.

49 See Earl of Chesterfield v Janssen 2 Ver Sr 125, 28 Eng Rep 82 at 100 [Ch 1750] where the court described an “unconscionable term” as “[t]hat which no man in his senses and not under delusion would make on one hand, and that which no honest and fair man would accept on the other hand”. This doctrine also fully applies in Nigeria; in Okoli v Morecab Finance (Nigeria) Ltd [2007] 14 NWLR (pt 1053) 37, the Nigerian Supreme Court equated unconscionability with fraud when it opined that: “… fraud may be presumed from the nature of the bargain … the circumstances and condition of the parties contracting, weakness, one sided, extortion and advantage taken of that weakness on the other. Fraud in such cases does not mean deceit or circumvention; it means unconscionable use of the power arising out of the circumstances and condition of the parties”.

50 There are no punitive damages in Nigeria for breach of contract; see Agbanelo v Union Bank of Nigeria Plc [2000] 7 NWLR (pt 666) 534 at 551. Punitive damages only exist in torts in Nigeria; see Maritime Management Associates Inc and Another v National Maritime Authority [2012] 18 NWLR (pt 1333) 506 SC at 544. This is not the same in the USA, where punitive damages can be awarded for breach of contract, as in the following cases: Roddy v Lexington Insurance Co 2009 WL 3335363 [ED Tenn 2009]; Wilson v GMAC Financial Services Corp 2009 WL 467583 [ED Tenn 2009]; and Woodruff v National Life Insurance Co 2008 WL 1734194 [ED Tenn 2008].

51 See generally the seminal article of Angelo, A and Ellinger, E “Unconscionable contracts: A comparative study of the approaches in England, France, Germany, and the United States” (1992) 14 Loyola Los Angeles International & Comparative Law Review 455 Google Scholar at 468–70.

52 See the Regulation, sec 23(2) on ranking the priority of security interests in order of perfection.

53 See CAMA, sec 197.

54 Ibid.

55 For a discussion of how the floating charge was transformed into a floating lien in the Australian PPSA, see Quirk, P “Whether Australian secured transactions laws will transition from the English system to the Personal Property Securities Act?” [2009] 31 Thomas Jefferson Law Review 219 Google Scholar at 252–56.

56 A floating charge has priority disadvantages over fixed charges because of its postponed attachment, which only occurs upon crystallization. Also, to register a floating charge, a copy of the charge is deposited in the registry (document filing), whereas in the case of a floating lien in the US, only a financing statement is filed (notice filing). For a full examination of the weaknesses of a floating charge, see Blake, J “the creation and enforcement of floating security interests in the US and Singapore” [2009] 18/5 Norton Journal of Bankruptcy Law and Practice 577 Google Scholar at 577.

57 See G McCormack Reservation of Title (2nd ed, 1995, Sweet & Maxwell) at 4.

58 A floating charge encumbers all present and future assets of a debtor, no matter where they are located. This also includes assets in which the debtor may only have an equitable ownership interest. Thus, in hire purchase or conditional sale transactions, for instance, where the company is the secured party, but a debtor to the holder of a floating charge, and where legal title of assets subject to conditional sale or hire purchase remains with the company until the hire purchaser or conditional buyer has paid the seller (the company in this case) in full, the dilemma of priority as to a crystallized interest of a floating chargee who eventually steps into the “shoes” of the company (the floating chargor) becomes heightened; this is particularly so, given also that the floating chargee / receiver could frustrate the contracts the company has with a third party, or even defeat the third party whose interest in the matter is only equitable since legal title was yet to pass from the company; see ibid. There is no formula with which to avert this kind of confusion in Nigeria, neither has it been a subject of discussion before any court, given the non-existence of any judicial decision on the dilemma.

59 See the Regulation, sec 7(2)(b) and UCC, art 9-204(1). Both sections include the concept of a “floating lien”.

60 The security interest in each new asset brought into the asset pool is automatically perfected, owing to the initially perfected floating lien security interest. For a penetrating treatment of after-acquired property clauses (floating lien) in a security agreement, see Kronman, A “The treatment of security interests in after-acquired property under the proposed Bankruptcy Act” (1975) 124 University of Pennsylvania Law Review 110 Google Scholar at 119.

61 This is because on one hand, there is competition between two security interests, one of them (the  floating lien of the Regulation) attaching to the collateral from the beginning of the creation of an enforceable security agreement. On the other hand, another security interest on collateral (from the CAMA floating charge) attaches to the collateral later in time after crystallization. The dilemma is how will priority be resolved given the fact that the two security interests emerged from two unequal hierarchical sources of law (the Regulation versus a statute, CAMA) and also the fact that priority is based on the first to perfect, first in right principle. There is no formula in place to resolve this current dilemma in Nigerian jurisprudence and this is indeed one of the defects of the Regulation.

62 See Y Dina, J Akintayo and F Ekundayo “Guide to Nigerian legal information” (February 2005) Globalex, available at: <http://www.nyulawglobal.org/globalex/Nigeria.html> (last accessed 14 December 2016). The Nigerian Court of Appeal has held that validly made subsidiary legislation has the effect and force of the principal or enabling act; see Trade Bank Plc v LILGC [2003] 3 NWLR (pt 806) 11. However, the authors have found no authority that addresses the consequences of a conflict between a statute (like CAMA) and a Regulation (such as the CBN Regulation). It is therefore common sense that a statute enacted by the highest lawmaking body (which represents the citizenry) will take precedence over a mere regulation that derives life from an act or law respectively made by the National Assembly or a state's house of assembly.

63 See the Regulation, sec 2 for the definition of “secured creditor”, which limits it to banks and other financial institutions.

64 See CAMA, secs 390 and 393 on the appointment of a receiver and its duties. Although sec 390 instructs the receiver to manage the company in the interest of the company and all interested parties, in reality, the receiver is only a “hand” of the floating chargee. To this extent, where a floating chargee has appointed a receiver to manage a company and its asset pool, in which a secured party bank has a floating lien interest, the authors submit that, in such circumstances, the secured bank creditor (floating lienee) will only benefit from assets (if any) left unencumbered by the floating chargee.

65 Usually, where a charge is created on an incorporated company's asset, the charge is registered in the Corporate Affairs Commission (CAC) registry. Under the Regulation, a security interest in an incorporated debtor's assets would have to be registered in both the CAC and the collateral registry. Similarly, a searcher would have to search in these two unlinked registries, increasing the transaction cost.

66 Nigeria has now reserved the collateral registry exclusively for the use of banks and other financial institution secured creditors. Since non-bank creditors cannot register their security interests in debtors’ personal property collateral in this registry, a secured creditor bank would not be able to find out if the asset being presented to it by a debtor as collateral is already encumbered by a third party's security interest. Therefore, there will no doubt be priority fights soon, as a result of the ostensible ownership problem.

67 In the USA, UCC, art 9-609; Australia, PPSA, sec 123; New Zealand, PPSA, sec 109; Malawi, PPSA, sec 87; Romania, Law on the Legal Treatment of Security Interests in Personal Property (1999), art 36; Ghana, Borrowers and Lenders Act (2008), sec 34, etc. In the case of Nigeria, see the Regulation, secs 35–38.

68 For a masterful explanation as to why self-help repossession of a debtor's collateral is ideal, see the seminal article of JJ White “The abolition of self-help repossession: The poor pay even more” (1973) Wisconsin Law Review 503 at 511–30, available at: <http://repository.law.umich.edu/cgi/viewcontent.cgi?article=1432&context=articles> (last accessed 14 December 2016).

69 Id at 524, in particular. footnotes 59 and 60, discussing the study conducted by Prof Johnson on how debtors are far better off with self-help repossession than with recovery through the courts. For a general overview of the study, see Johnson, R “Creditors’ remedies and rate ceilings some study results of the national commission on consumer finance” (1972) 26 Personal Finance Law Quarterly Review 65 Google Scholar.

70 See the Regulation, sec 35(5) and UCC, art 9-609. The safeguard that checkmates the overreaches of secured creditors is the “without the breach of peace” standard, the breach of which could expose the secured party to liability for damages. In the USA, such damages could be punitive, as in Sanchez v Mbank of El Paso 792 SW2d 530, 12 UCC2d 1169 [Tex App 1990], aff'd 836 SW2d 151, 17 UCC2d 1358 [Tex 1992] and General Finance Corporation v Smith 505 So 2d 1045, 3 UCC2d 1278 [Ala 1987].

71 See the Regulation, sec 35 (1)–(3).

72 See sec 27 of the Sale of Goods Act, 1893, a statute of general application in Nigeria. To qualify as selling in  “market overt”, the seller must display the goods for sale and the market must be the type where such goods are normally sold. Where this is the case and a bona fide purchaser for value purchases from such a market, he acquires good title to the purchased goods. For a penetrating discussion on this, see Pease, J “The change of the property in goods by sale in market overt” (1908) 8 Columbia Law Review 375 Google Scholar at 377.

73 It has been the judicial attitude in Nigeria to show over-protection to a bona fide purchaser for value without notice. This could easily be understood against the backdrop that, owing to the lack of a registry where security interests in personal property are registered, the possibility of disposing of an encumbered asset or using it to obtain financing from a third party is high. A more complete discussion was undertaken by Obaseki JSC in Animashaun v Olojo [1990] NWLR (pt 154) 111.

74 These factors include the lack of an identification database for citizens and residents in Nigeria, poor security apparatuses for the easy detection of crimes (such as closed circuit camera televisions on streets and highways), and the lack of a unified electronic database for registered vehicles and other personal property.

75 Drobnig, U “Basic issues of European rules on security in movables” in Lacy, J (ed) The Reform of UK Personal Property Security Law: Comparative Perspectives (2010, Routledge-Cavendish) 449 Google Scholar.

76 See CAMA, sec 492.

77 See UCC, art 9-322 and 9-23. See also White and Robert Uniform Commercial Code, above at note 32 at 1277–92.

78 See CAMA, part XV.

79 Available at: <https:// www.law.cornell.edu/uscode/text/11> (last accessed 14 December 2016).

80 Available at: <http://www.legislation.gov.uk/ukpga/1986/45/contents> (last accessed 14 December 2016).

81 See the second sched to the 1999 Constitution of Nigeria (as amended), which contains the concurrent legislative list.

82 This is a statute of general application in Nigeria. It governs mortgage transactions in the states located in the eastern and northern parts of the country, as well as some parts of Lagos.

83 The Property and Conveyancing Law 1959 applies to the western part of Nigeria (apart from Lagos) and the former mid-western region including Edo and Delta states. The Lagos state Mortgage Law, 2010 applies to mortgage transactions where the property is not located in the parts governed by the Conveyancing Act 1881. See generally, Chianu, E Law of Securities and Bank Advances (Mortgage of Land) (2nd ed, 2004, Ambik Press) at 18–33 Google Scholar.

84 See generally Obilade, A The Nigerian Legal System (1979, Sweet & Maxwell) at 64–68 Google Scholar.

85 See Butner v US 440 US 48 [1979] at 54: “Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analysed differently simply because an interested party is involved in a bankruptcy proceeding.” It is advised that this legal logic be applicable in the Nigerian bankruptcy regime to solve the legal uncertainty that exists with respect to a debtor's mortgaged property governed by different state laws and the resulting security interests in the context of the debtor's bankruptcy.