A buyer in the ordinary course of business takes collateral (other than farm products) free of any security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

Question

Quizplus · Accepted Answer

Under Article 9 of the Uniform Commercial Code (UCC), a buyer in the ordinary course of business takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence, provided the purchase is made from a person in the business of selling goods of that kind. This rule does not apply to farm products.

A Buyer in the Ordinary Course of Business Takes Collateral