A bailee can pass good title to a good-faith purchaser,even when the sale was not authorized by the owner and the bailee has no title to the goods but is in the business of selling those particular types of goods.

Question

Quizplus · Accepted Answer

This is known as the "entrustment rule" and is recognized by most states in the US through the Uniform Commercial Code. If the bailee is in the business of selling certain types of goods and receives them in good faith from someone who had apparent authority to sell them, then the bailee can pass good title to a buyer who purchases the goods in good faith, even if the sale was not authorized by the owner. However, this rule does not apply if the bailee knew or should have known that the goods were stolen or otherwise not owned by the seller.

A Bailee Can Pass Good Title to a Good-Faith Purchaser,even