Key Contracts. It may be appropriate to include paragraph (b) if the transaction has a concept of “Key Contract” (or similar). The secured party may prefer a transfer by way of security (or mortgage) over contractual rights where the contract is material to the secured party. In these circumstances, the secured party may want to prevent the contract from being amended. Under the general law, a transfer of the contractual rights to the secured party will have the effect of preventing the grantor and counterparty from amending the contract whereas the granting of a charge or other security interest which does not involve any transfer may not: see ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ (1878) 3 QBD 569.
Appears in 2 contracts
Sources: General Security Agreement, General Security Agreement