Sale of Security Interests Flashcards
1
Q
General Rule
A
A secured interest survives a sale of the collateral.
2
Q
When Security Interest Does Not Survive a Sale of Collateral (Exceptions to General Rule)
A
- Authorized release from secured party
- (BIOCOB)- the buyer is a buyer in the ordinary course of business
- Garage-sale exception
3
Q
When is a Buyer in the Ordinary Course of Business?
A
a BIOCOB is a person who:
- buys in good faith
- without knowledge that the sale violates the rights of another person in the goods
- in the ordinary course of business
- from a person in the business of selling goods of that kind
4
Q
Garage Sale Exception
A
When a person buys goods for personal, family, or household use from someone who used the goods for that purpose –> such a buyer takes free of a security interest created by his seller if:
- he buys for value
- without knowledge of the security interest
- before a financing statement is filed
