Entrustment: An owner who entrusts goods to a merchant who deals in those goods has no rights against a BFP. Who has no rights?

Entrustment: An owner who entrusts goods to a merchant who deals in those goods has no rights against a BFP. Who has no rights?

• A. BFP
• B. Merchant
• C. Secured party
• D. Owner who entrusted the goods

Answer: (D)

When goods are entrusted to a merchant who deals in those goods, the entrustment transfers the owner’s rights to the merchant for purposes of transfer to a purchaser in the ordinary course. That means the merchant can pass along those rights to a buyer who purchases in good faith and in the ordinary course of business, leaving the original owner with no ability to challenge that purchase against the buyer. A bona fide purchaser for value in the ordinary course thus takes title free of the entrustor’s claims. So the person who has no rights against a bona fide purchaser in this scenario is the owner who entrusted the goods.

When goods are entrusted to a merchant who deals in those goods, the entrustment transfers the owner’s rights to the merchant for purposes of transfer to a purchaser in the ordinary course. That means the merchant can pass along those rights to a buyer who purchases in good faith and in the ordinary course of business, leaving the original owner with no ability to challenge that purchase against the buyer. A bona fide purchaser for value in the ordinary course thus takes title free of the entrustor’s claims. So the person who has no rights against a bona fide purchaser in this scenario is the owner who entrusted the goods.