2-403.
Power to transfer; good faith purchase of goods; entrusting.
(1) A purchaser of goods acquires all title which his or her transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though
(a) the transferor was deceived as to the identity of the purchaser, or
(b) the delivery was in exchange for a check which is later dishonored, or
(c) it was agreed that the transaction was to be a "cash sale", or
(d) the delivery was procured through fraud punishable as larcenous under the criminal law.
(2) Any entrusting of possession of goods to a merchant for purposes of sale who deals in goods of that kind gives him or her power to transfer all rights of the entruster to a buyer in ordinary course of business.
(3) "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law.
(4) The rights of other purchasers of goods and of lien creditors are governed by the Articles on Secured Transactions (Article 9) and Documents of Title (Article 7).
Source:Laws 1963, c. 544, Art. II, § 2-403, p. 1735; Laws 1967, c. 632, § 1, p. 2111; Laws 1991, LB 162, § 3.
Annotations
In a situation where a cash seller delivers goods to a buyer and is paid with a dishonored check, this section allows the buyer to pass greater title to a good faith purchaser than the buyer could claim. Maryott v. Oconto Cattle Co., 259 Neb. 41, 607 N.W.2d 820 (2000).
The definition of good faith purchaser does not expressly or impliedly include lack of knowledge of third-party claims as an element. Maryott v. Oconto Cattle Co., 259 Neb. 41, 607 N.W.2d 820 (2000).
A dealer having the authority to expose vehicles for sale in the ordinary course of business, pursuant to this section, binds his financier to deliver title to any vehicle so sold, whether or not dealer remits the proceeds to his financier. Dugdale of Nebraska v. First State Bank of Gothenburg, 227 Neb. 729, 420 N.W.2d 273 (1988).
A party whose title in goods is voidable as being conditioned upon payment for the goods can transfer title to a good-faith purchaser. Mid-South Order Buyers, Inc. v. Platte Valley Livestock, Inc., 210 Neb. 382, 315 N.W.2d 229 (1982).
Financial institution lending money on cattle held to qualify as a good faith purchaser for value from a purported owner holding voidable title when financial institution relied on contract to sell and bill of sale of prior owner, inspected the cattle, and had no notice of any defect in title. Jordan v. Butler, 182 Neb. 626, 156 N.W.2d 778 (1968).