When the security interest is perfected and the buyer knows of its existence, a buyer in the ordinary course of business:
A) is subject to the security interest created by his seller.
B) takes the purchase free from a security interest created by his seller.
C) takes the purchase free from a security interest only if the person is buying farm products from a person engaged in a farming operation.
D) is not protected if the dealership is in default of its loan agreement.

Question

Quizplus · Accepted Answer

One of the exceptions to the general priority rule of the Uniform Commercial Code is that a buyer in the ordinary course of business (other than a person buying farm product from a person engaged in farming operations) takes the purchase free from a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.

When the Security Interest Is Perfected and the Buyer Knows