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EntrustmentA merchant who deals in particular goods has the power to transfer all rights of one who entrusts to him goods of the kind to a “buyer in the ordinary course of business” (see Figure 18.3 "Entrustment"). [4] The UCC defines such a buyer as a person who buys goods in an ordinary transaction from a person in the business of selling that type of goods, as long as the buyer purchases in “good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods.” [5] Bess takes a pearl necklace, a family heirloom, to Wellborn’s Jewelers for cleaning; as the entrustor, she has entrusted the necklace to an entrustee. The owner of Wellborn’s—perhaps by mistake—sells it to Clara, a buyer, in the ordinary course of business. Bess cannot take the necklace back from Clara, although she has a cause of action against Wellborn’s for conversion. As between the two innocent parties, Bess and Clara (owner and purchaser), the latter prevails. Notice that the UCC only says that the entrustee can pass whatever title the entrustor had to a good-faith purchaser, not necessarily good title. If Bess’s cleaning woman borrowed the necklace, soiled it, and took it to Wellborn’s, which then sold it to Clara, Bess could get it back because the cleaning woman had no title to transfer to the entrustee, Wellborn’s. Figure 18.3 Entrustment 
Entrustment is based on the general principle of estoppel: “A rightful owner may be estopped by his own acts from asserting his title. If he has invested another with the usual evidence of title, or an apparent authority to dispose of it, he will not be allowed to make claim against an innocent purchaser dealing on the faith of such apparent ownership.” [6] KEY TAKEAWAYThe general rule—for obvious reasons—is that nobody can pass on better title to goods than he or she has: a thief cannot pass on good title to stolen goods to anybody. But in balancing that policy against the reasonable expectations of good-faith buyers that they will get title, the UCC has made some exceptions. A person with voidable title can pass on good title to a good-faith purchaser, and a merchant who has been entrusted with goods can pass on title of the entrustor to a good-faith purchaser. EXERCISESWhy is it the universal rule that good title to goods cannot be had from a thief? What is the “voidable title” exception to the universal rule? Why is the exception made? What is the “entrusting” exception to the general rule? [1] Uniform Commercial Code, Section 1-201(19). [2] Uniform Commercial Code, Sections 2-403(1), 2-403(1), 2A-304, and 2A-305. [3] Dimension Funding, L.L.C. v. D.K. Associates, Inc., 191 P.3d 923 (Wash. App. 2008). [4] Uniform Commercial Code, Sections 2-403(2), 2A-304(2), and 2A-305(2). [5] Uniform Commercial Code, Section 1-201(9). [6] Zendman v. Harry Winston, Inc., 111 N.E. 2d 871 (N.Y. 1953). Directory: site -> textbooks textbooks -> This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 0 License without attribution as requested by the work’s original creator or licensee. Preface textbooks -> This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 0 License without attribution as requested by the work’s original creator or licensee. Preface Introduction and Background textbooks -> Chapter 1 Introduction to Law textbooks -> 1. 1 Why Launch! textbooks -> This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 0 License without attribution as requested by the work’s original creator or licensee textbooks -> This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 0 License textbooks -> This text was adapted by The Saylor Foundation under a textbooks -> This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 0 License without attribution as requested by the work’s original creator or licensee. Preface textbooks -> This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 0 License textbooks -> Chapter 1 What Is Economics? Download 10.04 Mb. Share with your friends:
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