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a wholesaler delivers goods into a dealer’s inventory; the goods’ owner leaves them with a merchant for repair, and the merchant also deals in goods of the kind; and a buyer purchases goods from a seller but nonetheless leaves the goods in the seller’s inventory. [ Lakes Gas Co. v. Clark Oil Trading Co. , 875 F.Supp.2d 1289 (D. Kan. 2012).] Examples : (1) A home-improvement store purchased around 4,100 crane mats from a timber merchant that regularly sold such mats in the ordinary course of its business. Per the agreement, the merchant stored the mats at its own warehouses, segregated from the other mats that it sold to its customers, and distributed the store’s mats to the store’s customers as directed. Here, there is an entrustment empowering the merchant to transfer the mats to a buyer in the ordinary course. The store acquiesced for the merchant to retain possession of the mats, even after the store properly purchased them. [ See Totem Forest Prods., Inc. v. T & D Timber Prods., LLC , 2:17-cv-00070-JDL, 2017 WL 744547 (D. Me. 2017).] (2) A married couple purchased a truck from a dealer, a merchant dealing in similar trucks. The couple permitted the dealer to retain possession of the truck to make agreed-upon repairs and cosmetic improvements. A short time later, the dealer sold the truck to a buyer in the ordinary course. Under the criminal law, this sale constituted criminal larceny. Even so, the dealer effectively transferred the couple’s rights in the truck to the buyer, meaning the buyer now has good title to the truck as against everyone, including the couple. By permitting the dealer to retain the truck, even after the couple bought it, the couple entrusted the truck to the dealer. The dealer thus had power to transfer all the couple’s rights in the truck to a buyer in the ordinary course, which the dealer did. [ Adapted from Best Signs, Inc. v. King , 358 S.W.3d 226 (Tenn. Ct. App. 2009).] 3. Buyer in the Ordinary Course of Business The UCC’s definition of buyer in the ordinary course of business is prolific and multifaceted. To start, the term refers to one buying goods (1) in good faith, (2) without knowing that the sale violates another’s rights in the goods ( e.g. , knowledge that the sale violates a security agreement), (3) in the ordinary course, (4) from a person (not a pawnbroker) in the business of selling goods of the kind. [U.C.C. § 1-201(b)(9) (2001); 1 Anderson U.C.C. § 1-201:97 (3d. ed.), Westlaw (database updated June 2021).] Note : The term buyer in the ordinary course is not synonymous with good-faith purchaser for value. Indeed, the former is notably narrower and more difficult to satisfy than the latter. [ See 2 Hawkland UCC Series § 2-403:4, Westlaw (database updated June 2021).]
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