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Understanding Buyer in Ordinary Course of Business: A Legal Perspective
Definition & Meaning
A "buyer in ordinary course of business" refers to an individual or entity that purchases goods in good faith, without awareness that the transaction infringes on someone else's rights. This buyer typically acquires goods from a seller who is engaged in the regular business of selling such items, excluding pawnbrokers. The purchase must align with the usual practices of the seller's business or the seller's own standard procedures. The buyer can pay in various ways, including cash, trade, or credit, and may also obtain goods under a prior sales agreement. However, this definition does not apply to those who acquire goods through bulk transfers or as collateral for a debt.
Table of content
Legal Use & context
This term is commonly used in commercial law, particularly under the Uniform Commercial Code (UCC), which governs the sale of goods in the United States. Understanding this concept is crucial for businesses engaged in buying and selling goods, as it helps protect buyers from claims regarding the goods they purchase. Users can manage related legal matters using templates from US Legal Forms, which provide guidance on transactions and rights associated with being a buyer in ordinary course of business.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A local bakery purchases flour from a wholesale supplier. The bakery operates regularly in the business of selling baked goods and has no reason to believe the supplier does not have the right to sell the flour. This transaction qualifies as a purchase by a buyer in ordinary course of business.
Example 2: A furniture store buys a shipment of chairs from a manufacturer. The store follows its usual purchasing practices and pays for the chairs upfront. This is also an example of a buyer in ordinary course of business.
Relevant laws & statutes
The concept of "buyer in ordinary course of business" is primarily governed by the Uniform Commercial Code (UCC), specifically UCC Article 2, which deals with the sale of goods. This article outlines the rights and obligations of buyers and sellers in commercial transactions.
Comparison with related terms
Term
Definition
Difference
Buyer
A person who purchases goods or services.
A buyer in ordinary course of business has specific protections under the UCC.
Bulk Transfer
A sale of a large quantity of goods, typically outside the ordinary course of business.
Bulk transfers do not qualify for the protections given to buyers in ordinary course of business.
Good Faith Buyer
A buyer who purchases without knowledge of any adverse claims.
All buyers in ordinary course must act in good faith, but not all good faith buyers meet the other criteria.
Common misunderstandings
What to do if this term applies to you
If you believe you are a buyer in ordinary course of business, ensure that your purchase meets the necessary criteria. If you encounter disputes regarding the goods purchased, consider consulting a legal professional for guidance. Additionally, you can explore US Legal Forms for templates that can assist you in managing your transactions and rights effectively.
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