GA Code § 11-9-320 (2021)
2021 Georgia Code|Title 11 - Commercial Code|Article 9 - Secured Transactions|Part 3 - Perfection and Priority|§ 11-9-320. Buyer of Goods

  Buyer in ordinary course of business. Except as otherwise provided in subsection (e) of this Code section, a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.   Buyer of consumer goods. Except as otherwise provided in subsection (e) of this Code section, a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:   Without knowledge of the security interest;   For value;   Primarily for the buyer's personal, family, or household purposes; and   Before the filing of a financing statement covering the goods.     Effectiveness of filing for subsection (b) of this Code section. To the extent that it affects the priority of a security interest over a buyer of goods under subsection (b) of this Code section, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by subsections (a) and (b) of Code Section 11-9-316.   Buyer in ordinary course of business at wellhead or minehead. A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.   Possessory security interest not affected. Subsections (a) and (b) of this Code section do not affect a security interest in goods in the possession of the secured party under Code Section 11-9-313.     (Code 1981, §11-9-320, enacted by Ga. L. 2001, p. 362, § 1.)   Law reviews.   - For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For note, "U.C.C. Section 9-307(1) and the Non-Possessory Buyer: Is the Good Faith Purchaser Always Right?," see 19 Ga. L. Rev. 123 (1984). For note on 1993 amendment of this section, see 10 Ga. St. U.L. Rev. 41 (1993). For comment on Sherrock v. Commercial Credit Corp., 290 A.2d 648 (Del. S. Ct. 1972), see 10 Ga. St. B.J. 110 (1973).   JUDICIAL DECISIONS   Editor's notes.   - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.   Legislative intent.    - Guiding principle in former subsection (1) of this section is to protect buyer in ordinary course of business from dealer against reservation of title or other hidden interest in goods. Commercial Credit Equip. Corp. v. Bates, 154 Ga. App. 71, 267 S.E.2d 469 (1980) (decided under former Code Section11-9-307).    Statute was intended to protect buyers in the ordinary course from the lien claims of creditors who financed floor plan arrangements for the dealer. Superior Bank, FSB v. Human Servs. Emples. Credit Union, 252 Ga. App. 489, 556 S.E.2d 155 (2001) (decided under former Code Section11-9-307).   Protection of buyers.   - Buyers in ordinary course of business take free of previously perfected security interests for the sake of untrammeled commercial dealing. United States v. McCleskey Mills, Inc., 409 F.2d 1216 (5th Cir. 1969) (decided under former Code Section 11-9-307).   Applicability.    - This provision not operative where perfection of security interest is required under Ch. 3, T. 40. First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. 284, 167 S.E.2d 190 (1969) (decided under former Code Section11-9-307).   Floor-plan financed vehicle.    - Where there is floor-plan financing of vehicle, perfection of security interest in inventory would come under Uniform Commercial Code and as to such security interest created by a dealer priority is governed by former § 11-9-307 (see now § 11-9-320). Rome Bank & Trust Co. v. Bradshaw, 143 Ga. App. 153, 237 S.E.2d 612 (1977) (decided under former Code Section11-9-307).   Knowledge of violation of security interest.    - A buyer who merely knows of a security interest of another party covering certain goods constitutes a buyer in ordinary course of business and takes free of that security interest, whereas a buyer who knows that the sale actually violates some term of the security agreement not waived by the secured party takes subject to that security interest. First Nat'l Bank v. Atlanta Classic Cars, Inc., 184 Ga. App. 784, 363 S.E.2d 16 (1987) (decided under former Code Section11-9-307).   Sale of collateral.    - Bona fide purchaser's, a corporation, purchase of a machine did not fall within an exception to the general rule that a security interest continued after the sale of the collateral, as a similar argument in Superior Bank v. Human Services Employees Credit Union, 252 Ga. App. 489, 556 S.E.2d 155 (2001) was rejected. Intermet Corp. v. Fin. Fed. Credit, Inc., 263 Ga. App. 622, 588 S.E.2d 810 (2003).   Purchase of used car from car-leasing business.    - Where sale of used cars upon termination of leases was merely incidental to leasing business, former subsection (1) had no application to such incidental sales and purchaser at such sale did not purchase from a person engaged in business of selling cars and was therefore not entitled to protection afforded to buyers in the ordinary course of business. United Carolina Bank v. Capital Auto. Co., 163 Ga. App. 796, 294 S.E.2d 661 (1982) (decided under former Code Section11-9-307).   Attachment proceedings.    - Where plaintiffs in attachment proceedings are seeking refund of down payment after recission of contract, fact that debt is to be satisfied by execution sale of attached mobile home does not make them buyers in ordinary course of business. Troy Lumber Co. v. Williams, 124 Ga. App. 636, 185 S.E.2d 580 (1971) (decided under former Code Section11-9-307).    Cited in Capital Auto. Co. v. GMAC, 119 Ga. App. 186, 166 S.E.2d 584 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134, 169 S.E.2d 720 (1969); United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970); Bank of Madison v. Tri-County Livestock Auction Co., 123 Ga. App. 768, 182 S.E.2d 687 (1971); Greater S. Distrib. Co. v. Usry, 124 Ga. App. 525, 184 S.E.2d 486 (1971); Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971); International Harvester Credit Corp. v. Commercial Credit Equip. Corp., 125 Ga. App. 477, 188 S.E.2d 110 (1972); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488, 211 S.E.2d 430 (1974); Sterling Nat'l Bank & Trust Co. v. Southwire Co., 713 F.2d 684 (11th Cir. 1983); Owensboro Nat'l Bank v. Jenkins, 173 Ga. App. 775, 328 S.E.2d 399 (1985); Hanington v. Palmer, 103 Bankr. 348 (Bankr. M.D. Ga. 1989).   RESEARCH REFERENCES   Am. Jur. 2d.   - 68A Am. Jur. 2d, Secured Transactions, §§ 70, 71, 269, 550, 780-800, 895-925.   Status as "Buyer in Ordinary Course of Business," 2 POF2d 165.   C.J.S.   - 72 C.J.S., Pledges, § 43.   U.L.A.   - Uniform Commercial Code (U.L.A.) § 9-320.   ALR.    - Rights as between holder of "trust receipt" and purchaser of goods from one who gave it, 31 A.L.R. 937.    Chattel mortgage on live stock as including increase, 39 A.L.R. 153.   Relative rights as between assignee of conditional seller and a subsequent buyer from the conditional seller after repossession or the like, 72 A.L.R.2d 342.   Who is "person in business of selling goods of that kind" within provision of UCC § 1-201(9) defining buyer in ordinary course of business for purposes of UCC § 9-307(1), 73 A.L.R.3d 338.   Construction of UCC § 9-307(e) providing that under certain conditions a buyer, other than a buyer in the ordinary course of business, takes free of a security interest securing "future advances", 35 A.L.R.4th 390.