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hypotheca security over moveable property that permits the borrower to retain possession. A hypothec is equivalent to a charge and is employed in international trading transactions. A letter of hypothecation is a letter addressed to a bank giving details of a shipment of goods relating to a draft. Should the draft be dishonoured, the bank is empowered to sell the goods. Maritime liens are a form of hypothec. Seamen have a lien for wages; a salvor for any sum due on salvage; a person repairing a ship or giving supplies in a foreign port for the services; one suffering loss as a result of damage caused by the ship. Claims under bonds of BOTTOMRY and RESPONDENTIA are secured by hypothec.
In Scotland special hypothecs are known:
- (1) the landlord's hypothec is a security over the invecta et illata (things brought or carried into the premises) subject to recognized exceptions in respect of one year's rent and not for prior arrears. The security will attach goods on hire or hire purchase;
- (2) the feudal superior's hypothec for feu duty, of little significance since for some time feu duties have been statutorily redeemed and the feudal system has been abolished by the Abolition of Feudal Tenure Act 2000;
- (3) a solicitor has a hypothec over any expenses to which his client is entitled;
- (4) the maritime hypothecs mentioned in respect of England are recognized in Scotland too.
Collins Dictionary of Law © W.J. Stewart, 2006