Document ID: chunk:federal_register_of_legislation:C2024C00719:section:46
Version: federal_register_of_legislation:C2024C00719
Segment Type: section
Provision Reference: s 46
Character Range: 135070–136015

46  Taking personal property free of security interest in ordinary course of business

Main rule
 (1) A buyer or lessee of personal property takes the personal property free of a security interest given by the seller or lessor, or that arises under section 32 (proceeds—attachment), if the personal property was sold or leased in the ordinary course of the seller's or lessor's business of selling or leasing personal property of that kind.

Exceptions
 (2) Subsection (1) does not apply if:
 (a) in a case in which personal property of that kind may, or must, be described by serial number—the buyer or lessee holds the personal property:
 (i) as inventory; or
 (ii) on behalf of a person who would hold the collateral as inventory; or
 (b) in any case—the buyer or lessee buys or leases the personal property with actual knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest.