Article 2 — Sales · Section 2-403
This section addresses the power of a seller or buyer to transfer ownership of goods despite a lack of authority to do so, focusing on principles of good faith purchasers.
Source: U.C.C. § 2-403
1. A seller with voidable title has power to transfer a good title to a good faith purchaser for value. 2. A buyer acquires a power to transfer a good title to a good faith purchaser for value, even if the buyer does not have authority to sell the good, provided the sale is made in good faith and without the knowledge of the original seller's claims.
UCC § 2-403 provides that if a seller has a title that can be voided (e.g., due to fraud or misrepresentation), they still can transfer valid ownership to a good-faith purchaser who buys the goods without knowledge of the seller’s wrongdoing. This means that buyers who purchase in good faith, even without authority, can gain valid ownership rights.
A title that may be invalidated due to certain defects, such as fraud, but can be transferred to a good faith purchaser.
A party that buys property without knowledge of any defects in the seller's title and pays value for the property.
Example 1
A person buys a car from a dealer who obtained it through fraud. The dealer's title may be voidable, but if the buyer was unaware of this and paid a fair price, they can claim good title.
Example 2
A thief sells a watch to an unsuspecting buyer. Despite the theft, if the buyer has no idea the watch was stolen and pays for it, they obtain a good title.