Sales and Leases | 117
eventually took over the premises. On the seventh day, the buyer did just that. On similar facts, a bankruptcy court held that the manufacturer retained possession of the jack for a commercially reasonable time. [ Adapted from Thompson v. McMaster (In re Fritz-Mair Mfg. Co.) , 16 B.R. 417 (Bankr. N.D. Tex. 1982).] 4. Section 2-402, Fraudulent Transfers, and Voidable Preferences The buyer’s rights under §§ 2-502 and 2-716 are not superior to the seller’s unsecured creditors’ rights in the goods if (1) the goods’ delivery or identification would, under the law of the place where the goods are located, constitute either a fraudulent transfer or an avoidable preference under law outside Article 2, and (2) the goods are identified or delivered not in the current course of trade, but rather in satisfaction of or as security for a prior claim for money (or security or suchlike). Voidable preferences are unique to federal bankruptcy law. For more on the subject, please see Quimbee’s Bankruptcy Outline. [U.C.C. § 2-402(3) (1951); 2 Hawkland UCC Series § 2-402:2, Westlaw (database updated June 2021).] Special Protections for Good-Faith Purchasers and Power to Transfer Generally, if one purchases goods, she acquires all title that her transferor either had or had power to transfer. Of course, if one purchases only a limited interest in goods, such as a fractional ownership interest, then her rights are confined to the scope of the interest she purchased. But special rules apply in the case of one who has voidable title; in this case, Article 2 sometimes empowers one to transfer a greater interest in the goods than she has. [ See U.C.C. § 2-403(1), cmt. 1 (1951).] 1. Power to Transfer if One Has Voidable Title to Goods Per § 2-403, one with voidable title to goods has power to transfer good title to a good-faith purchaser for value. Assuming goods are delivered under a transaction of purchase, one with voidable title has this power even though: the transferor was deceived as to the purchaser’s identity; the delivery was made in exchange for a check, and the check was later dishonored; the transaction was agreed to be a cash sale; or the delivery came about through fraud, and under the criminal law, the fraud could be punished as larcenous.
[U.C.C. § 2-403(1) (1951).]
a. Voidable Title v. Void Title v. Good Title
Title is voidable if it remains valid unless and until the transferor chooses to nullify it or set
Made with FlippingBook - Online Brochure Maker