Bonafide Purchaser

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General rule with purchasers (2-403)

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A purchaser of goods acquires all the title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires right only to the extent of the interest purchased.

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Exceptions: All only protect a bonafide purchaser.
(3 types)

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1. Voidable Title
2. Statutory Estoppel
3. Equitable Estoppel

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1. Voidable Title

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i. Owner parts with title
ii. First purchaser is guilty of fraud
iii. The Fraud would allow owner to rescind
a. For exam he will tell us the fraud is part of rescission.
iv. If the first purchaser sells to BFP before rescission the property is his.

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Statutory Estoppel [U.C.C. Section:2-203]

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1. A bona fide purchaser, purchasers from a merchant
-Merchant is person who deals with goods of that kind

2. Must be an entrustment to merchant
- Entrusting means, giving possession.
- Entruster is acting as agent of owner.
- Sometimes their asked to just safe keep it.
- If they do sell it, then the purchaser wont get title.

3. Sale to purchaser by ordinary course
- You receive all the rights of the entruster.




Stautory estoppel applies where an owner entrusts possession of goods to a Merchant who deals in goods of that kind. If a Buyer in the ordinary course of business then comes along and buys from Merhant in good faith, Owner cannot then recover from Buyer. Owner is estopped by statute (UCC) from relying on the general rule that you can't give better tilte than you have. (because, in this case, Merchant CAN give better title than he has.)

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3. Equitable Estoppel

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a. Act of owner (Clothed a vendor with indicia of title)
i. Indicia of title: Apparent authority to sell on your behalf.
Example: - Bill of sale
- The usual evidence of title, or apparent authority to sell.
**** Possession is insufficient
**** Need Possession Plus

b. Reasonable expectation of reliance.
Buyer relies on that person's indicia of authority and purchases in good faith

c. Actual reliance.

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Merchant:

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person who sells goods of that kind.

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Buyer in the ordinary course

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a purchaser in good faith. He purchases it from a merchant.


person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind”.

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Constructive notice: Every purchaser has duty to search all public records. Government records.

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Inquiry notice: when is there duty to inquire
• porter: always duty if you’re a merchant.
• Average Person: Based on actual information the purchaser is aware of, a reasonable person in the circumstances would become suspicious.
o A reasonable investigation
• Objective

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Porter v. Wertz

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(1) Wertz, from whom Defendant Feigen purchased the Utrillo was not "a person in the business of selling goods of that kind." Wertz was a deli worker, which Defendant Feigen could have discovered through minimal effort.
(2) Defendant Feigen did not act in good faith in making the purchase from Wertz. Good faith is defined as "honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade." [U.C.C. Section:2-203]. Defendant Feigen deviated from the standard of good faith by taking no effort to determine if Wertz was authorized by the rightful owner to sell the painting.