A transferee's rights to a warehouse receipt may be defeated by a good-faith purchaser of the goods from the transferor of the receipt.

Question

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According to the Uniform Commercial Code (UCC), a good-faith purchaser of the goods from the transferor takes priority over any rights of a transferee based on a warehouse receipt unless the transferee's rights in the receipt were created first and the purchaser had notice of them. The UCC specifies that this is true even if the purchaser acquires the goods after the transferor's title has been defeated.

A Transferee's Rights to a Warehouse Receipt May Be Defeated