Entrustment doctrine: If an owner entrusts goods to a merchant who deals in those goods, what is the owner's right against a bona fide purchaser for value?

Entrustment doctrine: If an owner entrusts goods to a merchant who deals in those goods, what is the owner's right against a bona fide purchaser for value?

• A. The owner has no rights against a BFP
• B. The owner may reclaim the goods from a BFP
• C. The BFP must pay the owner
• D. The merchant is liable to the BFP

Answer: (A)

When goods are entrusted to a merchant who deals in those goods, the entrustment makes the merchant capable of passing title to a purchaser in the ordinary course of business. A bona fide purchaser for value who buys from that merchant in the ordinary course takes good title, free of the owner’s claims. Because of this, the owner cannot reclaim the goods from the bona fide purchaser—the transfer to the buyer is protected by the entrustment rule. In short, the owner has no rights against a bona fide purchaser for value in this situation.

When goods are entrusted to a merchant who deals in those goods, the entrustment makes the merchant capable of passing title to a purchaser in the ordinary course of business. A bona fide purchaser for value who buys from that merchant in the ordinary course takes good title, free of the owner’s claims. Because of this, the owner cannot reclaim the goods from the bona fide purchaser—the transfer to the buyer is protected by the entrustment rule. In short, the owner has no rights against a bona fide purchaser for value in this situation.