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What are the necessary elements for a Security Agreement?

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Introduction
Elements of a Security Agreement 2.1. Agreement in Writing 2.2. Description of the Collateral 2.3. Grant of a Security Interest 2.4. Obligation Secured 2.5. Debtor and Secured Party
Conclusion

Introduction

This response will address the necessary elements for a Security Agreement under Kenyan law. The Security Interest and Enforcement Act, 2012 (SIEA) governs security interests in Kenya. This Act provides a comprehensive framework for the creation, perfection, and enforcement of security interests in personal property.

Elements of a Security Agreement

A security agreement is a contract between a debtor and a secured party that creates a security interest in personal property. The security interest gives the secured party the right to take possession of the collateral and sell it to recover the debt if the debtor defaults on the loan.

The following are the essential elements of a security agreement under the SIEA:

2.1. Agreement in Writing

The security agreement must be in writing and signed by the debtor. This requirement is found in Section 10(1) of the SIEA. The agreement must contain a description of the collateral, the grant of a security interest, and the obligation secured.

2.2. Description of the Collateral

The security agreement must contain a description of the collateral that is sufficient to identify it. This description must be clear and unambiguous. The SIEA does not specify the level of detail required for the description, but it must be sufficient to identify the collateral.

2.3. Grant of a Security Interest

The security agreement must grant the secured party a security interest in the collateral. This grant must be clear and unambiguous. The SIEA does not specify the language that must be used to grant a security interest, but it must be clear that the secured party has a right to take possession of the collateral and sell it to recover the debt if the debtor defaults.

2.4. Obligation Secured

The security agreement must identify the obligation that is secured by the collateral. This obligation can be a loan, a lease, or any other type of debt. The obligation must be clearly identified in the security agreement.

2.5. Debtor and Secured Party

The security agreement must identify the debtor and the secured party. The debtor is the person who owes the debt, and the secured party is the person who has the security interest in the collateral. The identities of the debtor and secured party must be clearly stated in the security agreement.

Conclusion

In conclusion, a valid security agreement under Kenyan law must be in writing, signed by the debtor, and contain a description of the collateral, a grant of a security interest, the obligation secured, and the identities of the debtor and secured party. These elements are essential for creating a valid security interest in personal property under the SIEA.