Power to Transfer Rights and Entrustment Under § 2-403: Discussions in Secured Transactions

This podcast focuses on two Article 9 issues: (i) when does a person have sufficient rights to grant an Article 9 security interest even though they have voidable title and (ii) when does the debtor have sufficient rights to grant an Article 9 security interest under the entrustment doctrine. 

Learning Outcomes

On completion of the podcast, the student will be able to:

1. Describe and apply how § 2-403 recognizes rights to collateral sufficient for the creation of a security interest. 
2. Identify when § 2-403(1) permits a party with voidable title to transfer rights to a good faith purchaser for value (including a secured party). 
3. Explain how the entrustment rule of § 2-403(2) sometimes permits a merchant dealing in goods of the kind to transfer good title to goods entrusted to them to a buyer in ordinary course of business.