MBE Rules · Contracts
Voidable Title and Entrustment
UCC §2-403
The rule
A buyer with voidable title can pass good title to a good-faith purchaser for value, and entrusting goods to a merchant who deals in goods of that kind empowers the merchant to transfer all rights to a buyer in the ordinary course.
In plain English
A buyer who has a voidable title can still sell the goods to someone else if that person buys them in good faith and for value. Additionally, if you give goods to a merchant who regularly sells those types of goods, that merchant can sell them to a buyer, transferring full ownership rights.
Worked example
Alice buys a car from Bob, but Bob later realizes he was tricked into the sale and wants the car back. Alice sells the car to Charlie, who buys it in good faith. Charlie now owns the car because he purchased it from Alice, who had a voidable title.
Memory hook
Voidable title? Good faith buyers still win!
The trap
Students often confuse voidable title with outright void title, mistakenly thinking that a buyer with voidable title cannot transfer any rights. They may also overlook the significance of good faith in these transactions.
How examiners test it
Questions often present scenarios involving a buyer with a voidable title and ask whether a subsequent purchaser can claim good title, focusing on the good faith element and the role of merchants in the transaction.
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