Section 112 – Competence of creating an agricultural charge
472.This section prevents the creation of a new agricultural charge, which is a rarely used form of security right.
473.The agricultural charge was introduced by the Agricultural Credits (Scotland) Act 1929. It can only be granted by agricultural co-operatives in favour of banks. The effect is similar to a floating charge – though while a floating charge can cover property of every type, the agricultural charge is limited to “stocks of merchandise”. In addition, agricultural charges appear to now only be capable of enforcement by placing the debtor into insolvency (since sequestration for rent, which is provided for in the 1929 Act, no longer exists as a process). They have therefore fallen out of use. In practice, co-operatives grant floating charges rather than agricultural charges.
