Article 9 — Secured Transactions · Section 9-320
UCC § 9-320 governs the rights of a buyer in the ordinary course of business regarding goods subject to a security interest.
Source: U.C.C. § 9-320
A buyer in the ordinary course of business (other than a consignor or a buyer of goods in a sale on approval or sale or return) takes free of a security interest created by the seller of the goods.
This section states that if a buyer purchases goods in the ordinary course of business from a seller who has a security interest in those goods, the buyer typically takes the goods free of that security interest. This protects buyers when they acquire goods from retailers who have financing arrangements.
A person who buys goods in good faith, without knowledge that the sale violates the rights of another party, and in the usual way of business.
An interest in personal property or fixtures that secures payment or performance of an obligation.
Example 1
If a person buys a sofa from a furniture store that has financed its inventory but is not aware of any security interest, they own the sofa outright without the secured lender's claim.
Example 2
A retailer sells new electronics to a customer, and although the retailer has a secured loan on that inventory, the customer takes the electronics free of that security interest.