28 (1) A buyer of goods from a seller who sells the goods in the ordinary course of business takes them free from any security interest therein given by the seller even though it is perfected and the buyer knows of it, unless the buyer also knew that the sale constituted a breach of the security agreement.  R.S.O. 1990, c. P.10, s. 28 (1). Same (1.1) Subsection (1) applies whether or not, (a)  the buyer took possession of the goods; (b)  the seller was in possession of the goods at any time; (c)  title to the goods passed to the buyer; or (d)  the seller took a security interest in the goods.  2006, c. 34, Sched. E, s. 9. Same (1.2) Despite subsection (1.1), subsection (1) does not apply if the goods were not identified to the contract of sale.  2006, c. 34, Sched. E, s. 9. Goods identified to contract (1.3) For the purposes of subsection (1.2), goods are identified to the contract of sale when they are, (a)  identified and agreed upon by the parties at the time the contract is made; or (b)  marked or designated to the contract, (i)  by the seller, or (ii)  by the buyer, with the seller’s consent or authorization.  2006, c. 34, Sched. E, s. 9. Lessors of goods (2) A lessee of goods from a lessor who leases the goods in the ordinary course of business holds the goods, to the extent of the lessee’s rights under the lease, free from any security interest therein given by the lessor even though it is perfected and the lessee knows of it, unless the lessee also knew that the lease constituted a breach of the security agreement.  R.S.O. 1990, c. P.10, s. 28 (2). Same (2.1) Subsection (2) applies whether or not, (a)  the lessee took possession of the goods; or (b)  the lessor was in possession of the goods at any time.  2006, c. 34, Sched. E, s. 9. Same (2.2) Despite subsection (2.1), subsection (2) does not apply if the goods were not identified to the contract of lease.  2006, c. 34, Sched. E, s. 9. Goods identified to contract (2.3) For the purposes of subsection (2.2), goods are identified to the contract of lease when they are, (a)  identified and agreed upon by the parties at the time the contract is made; or (b)  marked or designated to the contract, (i)  by the lessor, or (ii)  by the lessee, with the lessor’s consent or authorization.  2006, c. 34, Sched. E, s. 9. Purchasers of chattel paper (3) Subject to subsection (3.1), a purchaser of chattel paper has priority over any security interest in it if, (a)  the purchaser, in the ordinary course of the purchaser’s business and for new value, (i)  takes possession of the chattel paper if it is tangible chattel paper, or (ii)  obtains control of the chattel paper under subsection 1 (3) if it is electronic chattel paper; and (b)  the chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser. 2019, c. 7, Sched. 49, s. 7. Exception (3.1) If the rights arising out of tangible chattel paper are transferred to a purchaser as electronic chattel paper for new value and in the ordinary course of the purchaser’s business and if the tangible chattel paper is transferred to another purchaser who takes possession of it for new value and in the ordinary course of that purchaser’s business, the interest of the purchaser of the tangible chattel paper has priority over the interest of the purchaser of the electronic chattel paper if the tangible chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser of the tangible chattel paper. 2019, c. 7, Sched. 49, s. 7. Purchasers of instruments (4) A purchaser of collateral that is an instrument or negotiable document of title has priority over any security interest therein perfected by registration or temporarily perfected under section 23 or 24 if the purchaser, (a)  gave value for the interest purchased; (b)  purchased the collateral without knowledge that it was subject to a security interest; and (c)  has taken possession of the collateral.  R.S.O. 1990, c. P.10, s. 28 (4). Motor vehicles, transaction other than in ordinary course (5) Where a motor vehicle, as defined in the regulations, is sold other than in the ordinary course of business of the seller and the motor vehicle is classified as equipment of the seller, the buyer takes it free from any security interest therein given by the seller even though it is perfected by registration unless the vehicle identification number of the motor vehicle is set out in the designated place on a registered financing statement or financing change statement or unless the buyer knew that the sale constituted a breach of the security agreement.  R.S.O. 1990, c. P.10, s. 28 (5). Securities (6) A purchaser of a security, other than a secured party, who, (a)  gives value; (b)  does not know that the transaction constitutes a breach of a security agreement granting a security interest in the security to a secured party that does not have control of the security; and (c)  obtains control of the security, acquires the security free from the security interest.  2006, c. 8, s. 136. Same (7) A purchaser referred to in subsection (6) is not required to determine whether a security interest has been granted in the security or whether the transaction constitutes a breach of a security agreement.  2006, c. 8, s. 136. No action against purchaser for value without notice of breach (8) An action based on a security agreement creating a security interest in a financial asset, however framed, may not be brought against a person who acquires a security entitlement under section 95 of the Securities Transfer Act, 2006 for value and did not know that there has been a breach of the security agreement.  2006, c. 8, s. 136. Same (9) A person who acquires a security entitlement under section 95 of the Securities Transfer Act, 2006
is not required to determine whether a security interest has been granted in a financial asset or whether there has been a breach of the security agreement.  2006, c. 8, s. 136. Same (10) If an action based on a security agreement creating a security interest in a financial asset could not be brought against an entitlement holder under subsection (8), it may not be brought against a person who purchases a security entitlement, or an interest in it, from the entitlement holder.  2006, c. 8, s. 136. Section Amendments with date in force (d/m/y) 2000, c. 26, Sched. B, s. 16 (4) - 06/12/2000 2006, c. 8, s. 136
- 01/01/2007; 2006, c. 34, Sched. E, s. 9 - 01/08/2007 2019, c. 7, Sched. 49, s. 7 - 15/05/2020