A. INTRODUCTION

B. SCOTS COMMON LAW

C. ENGLISH LAW

D. THE ‘ENGLISH’ FLOATING CHARGE AND SCOTS LAW

(3) Opposition to floating charges

(4) Demand for floating charges?

E. AGRICULTURAL CHARGES

F. LATER DEVELOPMENTS

G. CONCLUSION

A. INTRODUCTION

An account of floating charges in Scots law should not begin merely with the arrival of the statutory floating charge in 1961. Rather, it is important to also understand the relationship between ‘floating’ security and Scots law prior to the Companies (Floating Charges) (Scotland) Act 1961. This can be described as the ‘pre-history’ of floating charges and is the focus of the present chapter.

The Scots common law rules on creating security rights are restrictive and long established. The position espoused principally by the institutional writers remains broadly applicable today. However, statutory creations, most notably the floating charge, have changed the landscape in this area. Exploring the reasons for Scots law's earlier rejection of security rights comparable to floating charges can help us assess whether this remained a justifiable approach as time progressed. After examining the common law position in Scotland, including with reference to Roman law and early Scots law, the chapter will consider the development of the floating charge in English law. This form of security was explicitly rejected by Scottish courts but later served as a model when the reform of security over moveable property was being considered by the Law Reform Committee for Scotland (LRCS), which led to the introduction of the statutory floating charge. The controversial status of the floating charge in English law, after it first appeared in the mid-to-late nineteenth century, may help explain why there was little pressure to introduce a similar security in Scots law until well into the twentieth century.