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e. The Shelter Rule and Good-Faith Purchasers for Value As mentioned, a purchaser generally takes whatever rights her transferor either has or has power to transfer. In that sense, the purchaser is said to shelter in her transferor’s rights. Suppose one with voidable title transfers good title to a good-faith purchaser for value. The good-faith purchaser, then, may transfer good title to anyone, regardless of whether that transferee would independently qualify as a good-faith purchaser for value. That transferee, then, is said to shelter in the rights of her transferor. [ See 2 Hawkland UCC Series § 2-403:3, Westlaw (database updated June 2021).] Entrusting A person may entrust possession of goods to a merchant who deals in goods of the kind . If so, then the merchant has power to transfer, to a buyer in the ordinary course of business, all of the entruster’s rights in the goods. Of course, it follows that the merchant’s power to transfer is limited to whatever rights the entruster has. Thus, for instance, if the entruster has no rights in the goods ( e.g. , because the entruster stole the goods), then the merchant can transfer no rights in the goods, even to a buyer in the ordinary course of business. If the merchant wrongfully transfers the goods, then the entruster may have a claim for conversion or some other tort against the merchant. [U.C.C. § 2-403(2) (1951); 2 Hawkland UCC Series § 2-403:4, Westlaw (database updated June 2021).] 1. Entrusting Defined Entrusting embraces not only delivering goods, but also any acquiescence for the merchant to retain possession of the goods. This rule applies regardless of whether the parties have expressed any condition to the delivery or acquiescence. What is more, this rule applies regardless of whether the merchant committed criminal larceny by (1) inducing the entruster to deliver possession or acquiesce in retention or (2) the manner in which the merchant disposed of the goods. Perhaps a common example of entrustment is a bailment, in which the goods’ owner delivers them to the merchant for a limited time and a specific purpose. [ See U.C.C. § 2-403(3) (1951); 2 Hawkland UCC Series § 2-403:4, Westlaw (database updated June 2021).]
Note : Even though a merchant lacks direct possession of the goods, if the merchant has control over them, this may suffice for entrustment. [ Lakes Gas Co. v. Clark Oil Trading Co. , 875 F.Supp.2d 1289 (D. Kan. 2012).]
2. Entrusting: Common Fact Patterns Typically, entrusting arises in one of four fact patterns:
the goods’ owner delivers them to a dealer to resell;
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