If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant has no authority to transfer any rights in the goods to a buyer in the ordinary course of business.

Question

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Under the Uniform Commercial Code (UCC), when an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant has the authority to transfer all rights in the goods to a buyer in the ordinary course of business, making the transaction valid and binding.

If an Owner Entrusts the Possession of Goods to a Merchant