Sales and Leases | 124
Oftentimes, one will sell oil, gas, or other minerals at a minehead or gashead. If so, then the person is deemed to be in the business of selling goods of that kind. [U.C.C. § 1-209(b)(9) (2001).] d. Buying Goods in the Ordinary Course One buys goods in the ordinary course if the sale to her conforms to the customary or usual practices in whatever kind of business in which the seller engages, or else with the seller’s customary or usual practices. [U.C.C. § 1-201(b)(9) (2001).] Example : A wealthy socialite owned a valuable painting, which she entrusted to a fine-arts merchant for appraisal and restoration. The merchant then sold the painting to a joint venture. Normally, the merchant accepted only payments by wire transfer, yet the merchant sold this painting to the venture for $25,000 cash, hoping to hide the income from the taxing authorities. Also, in the fine-arts business, it was customary for the seller to issue a bill of sale as part of the transaction. This time, the merchant issued no bill of sale, because he knew that the painting was not his to sell. The joint venture cannot be a buyer in the ordinary course. The $25,000 cash payment deviated from the merchant’s own usual practices, and the lack of a bill of sale deviated from customary industry practice. [ Adapted from Litchfield Cty. Auctions, Inc. v. Brideau , LLICV156012328S, 2019 WL 4860644 (Conn. Super. Ct. Sept. 3, 2019).] e. Buying in Good Faith In determining whether one buys goods in good faith, the general definition of good faith applies. In the context of buyers in the ordinary course, one example of a situation in which good faith may be found lacking arises if the buyer and seller collude to defraud a third party. Another example is when the buyer purchases the goods with knowledge of some third party’s claim ( e.g. , claim of ownership) against the goods. [ See 1 Anderson U.C.C. §§ 1-201:95, 1-201:97 (3d. ed.), Westlaw (database updated June 2021).] Example : A car dealer sold a car to his close friend at cost, without increasing the price to account for either the dealer’s profit or any required state taxes. What is more, the dealer let the friend drive the car with dealer’s plates, thus cheating the state out of registration fees. Finally, the dealer’s floor-plan lender had a security interest in all the dealer’s inventory. Whenever the dealer inspected the lot to take stock of the inventory, the friend returned the car to the dealer, to maintain the appearance of more stock and, hence, greater total value securing the loan. Here, the friend is not a buyer in the ordinary course. Every
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