Movable Hypothec on a Universality of Movable Assets

Quebec English Civil law Unannotated

Movable Hypothec on a Universality of Movable Assets

The movable hypothec on a universality of movable assets is the legal instrument by which a financial institution agrees to grant a business an operating line of credit secured by a hypothec on a universality of movable assets. This type of agreement is a cross between a movable hypothec agreement and a loan agreement and, as such, the parameters of these two agreements must be taken into account when interpreting this agreement.

This agreement is not stand-alone agreement; rather, it is an accessory to a transaction in which a party undertakes to grant a movable hypothec without delivery on the universality of its movable assets. The Civil Code requires that such an agreement be made in writing and that it indicate the “nature” of that universality.

The hypothec must also be published in accordance with the provisions of the Civil Code in order to be enforceable against third parties. The publication of such a hypothec is made by registering it on the Register of personal and movable real rights, under the name of the grantor or the description of the charged property.

Movable Hypothec on a Universality of Movable Assets

We recommend using this agreement in the context of a business relationship, where the borrower wishes to grant a hypothec on its movable assets (usually the company's equipment) to secure a loan from a creditor. Note that the terms of both the loan and the hypothec are covered in this template, even though they may be covered by separate primary agreements. 

Movable Hypothec on a Universality of Movable Assets

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Account Receivable
0.01.02 Activities
0.01.03 Agreement
0.01.04 Authorized Charges
0.01.05 Breach
0.01.06 Change in Control
0.01.07 Encumber or Encumbrance
0.01.08 Encumbered Asset
0.01.09 Event of Default
0.01.10 Force Majeure
0.01.11 Law
0.01.12 Legal Representatives
0.01.13 Loan Amount
0.01.14 Ordinary Course of Business
0.01.15 PARTY
0.01.16 Person
0.01.17 Promissory Note
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-compliance
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Time and Dates
0.04.03 Financial References
0.04.04 References within Agreement
0.04.05 Gender and Number
0.04.06 Headings
0.04.07 Presumptions
0.04.08 Knowledge
0.04.09 Approval
0.04.10 GAAP
1.00 UNIVERSAL MOVABLE HYPOTHEC
1.01 Principal Hypothec
1.02 Additional Hypothec
2.00 CONSIDERATION
3.00 TERMS OF PAYMENT
4.00 SCOPE OF SECURITY
4.01 Recourse in the Event of Default
4.01.01 Choice of LENDER
4.01.02 Hypothecary Recourses
4.01.03 Procedure
4.02 Release of the Encumbered Assets
4.03 Accounts Receivables
4.03.01 Authorization
4.03.02 Rights
4.03.03 Presumption
4.03.04 Formalities
4.04 Novation
4.05 Amounts Collected
4.05.01 Witholding
4.05.02 Investments
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status
5.02 Authority
5.03 Binding Agreement
6.00 REPRESENTATIONS AND WARRANTIES OF BORROWER
6.01 Prior Rights
6.02 Ownership
6.03 Location
6.04 Claims
6.05 Taxes and Fees
6.06 Environment
7.00 REPRESENTATIONS AND WARRANTIES OF LENDER
8.00 MUTUAL DUTIES AND OBLIGATIONS
9.00 DUTIES AND OBLIGATIONS OF BORROWER
9.01 Insurance
9.01.01 Coverage
9.01.02 Transport
9.01.03 Default
9.01.04 Loss
9.02 Hypothecs or Prior Encumbrances
9.03 Encumbered Assets
9.03.01 Preservation
9.03.02 Default
9.04 Alienation
9.04.01 Prohibition
9.04.02 Projected Alienation
9.04.03 Notification
9.04.04 Documentation
9.04.05 Replacement
9.05 Relocation
9.06 Transformation
9.06.01 Incorporation
9.06.02 Notice
9.07 Continuation of Activities
9.08 Taxes
9.09 Payment of Costs
9.09.01 Creation and Registration Fees
9.09.02 Reimbursement
9.10 Signature
9.11 Abandonment
9.12 Release of Hypothec
10.00 OBLIGATIONS OF LENDER
10.01 Peaceful Enjoyment
10.02 Release
10.02.01 Security
10.02.02 Hypothecary Rights
10.03 Exercise of Rights
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Effect of Breach
11.02 Force Majeure
11.02.01 No Default
11.02.02 Duty
11.03 Further Assurances
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Election
12.03 Counterparts
12.04 Amendment
12.05 Waiver of Rights
12.06 Electronic Transmission
12.07 Language
13.00 COMING INTO FORCE
14.00 DURATION
15.00 SCOPE


SCHEDULE A - EXCERPT FROM A RESOLUTION OF BORROWER
SCHEDULE 0.01.17 – PROMISSORY NOTE