Protection of a Buyer in the Ordinary Course of Business

The video explains the concept of a buyer in the ordinary course of business, who can purchase collateral free of a security interest if certain conditions are met. These conditions include purchasing in good faith, without notice of violating another party's security interest, and ensuring the sale is authorized. The seller must regularly sell goods of that kind, and the buyer must believe they are purchasing in the ordinary course of business.

What is a key benefit for a buyer in the ordinary course of business when purchasing collateral?

• They can resell the collateral at a higher price.

• They receive a discount on the purchase price.

• They are exempt from paying taxes on the purchase.

• They take the collateral free of any existing security interest.

Which of the following is a requirement for a buyer to be considered in good faith?

• The buyer must have a written contract.

• The buyer must not intend to deceive or defraud the secured party.

• The buyer must pay in cash.

• The buyer must be a registered business entity.

Why would a shell transfer of property not create a buyer in the ordinary course?

• Because it requires approval from a third party.

• Because it is conducted online.

• Because it is intended to defeat the security party's interest.

• Because it involves a large sum of money.

What must a buyer believe about the sale of the property to qualify as a buyer in the ordinary course?

• That the sale is authorized and does not violate any security interests.

• That the sale will result in a profit.

• That the sale is temporary.

• That the sale is exclusive to them.

In the context of purchasing in the ordinary course of business, what is expected of the seller?

• The seller must offer a warranty.

• The seller must provide a receipt.

• The seller must be a licensed dealer.

• The seller must regularly sell goods of that kind.