§ 26-1-9.1-320 — Buyer of goods

Indiana § 26-1-9.1-320

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 9.1: Secured Transactions

Text

(a) Except as otherwise provided in this
subsection and subsection (e), a buyer in ordinary course of business
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. The
following apply whenever a person is buying farm products from a
person engaged in farming operations who has created a security
interest on the farm products:
(1) A person buying farm products from a person engaged in
farming operations is not protected by this subsection if, within
one (1) year before the sale of the farm products, the buyer has
received prior written notice of the security interest. "Written
notice" means any writing that contains the following:
(A) The full name and address of the debtor.
(B) The full name and address of the secured party.
(C) In the case of a debtor doing business other than as an
individual, the United States Internal Revenue Service taxpayer
identification number of the debtor.
(D) A description of the collateral, including the type and
amount of farm products, the crop year, the county of location,
and a description of the real property on which the farm
products were grown or produced.
(E) Any payment obligations imposed on the buyer by the
secured party as conditions for waiver or release of the security
interest.
Notice must be received before a buyer of farm products has
made full payment to the person engaged in farming operations
for the farm products if the notice is to be considered "prior
written notice". The written notice lapses on either the expiration
period of the statement or the transmission of a notice signed by
the secured party that the statement has lapsed, whichever occurs
first.
(2) A secured party must, within fifteen (15) days of the
satisfaction of the debt, inform in writing each potential buyer
listed by the debtor whenever a debt has been satisfied and
written notice, as required by subdivision (1), had been previously
sent to that buyer.
(3) A debtor engaged in farming operations who has created a
security interest in farm products must provide the secured party
with a written list of potential buyers of the farm products at the
time the debt is incurred if such a list is requested by the secured
party. The debtor may not sell farm products to a buyer who does
not appear on the list (if the list is requested by the secured party)
unless the secured party has given prior written permission to the
debtor to sell to someone who does not appear on the list, or the
debtor satisfies the debt for that secured party on the farm
products he sells within fifteen (15) days of the date of sale. A
debtor who knowingly or intentionally sells to a buyer who does
not appear on the list (if the list is requested by the secured party)
and who does not meet one (1) of the above exceptions, commits
a Class C misdemeanor. A secured party commits a Class C
infraction if the secured party knowingly or intentionally gives
false or misleading information on the notice required by
subdivision (1) or the secured party fails within fifteen (15) days
of satisfaction of the debt to notify purchasers to whom a written
notice had been previously sent under subdivision (1) of the
satisfaction of the debt.
(4) A purchaser of farm products buying from a person engaged
in farming operations must issue a check for payment jointly to
the debtor and those secured parties from whom he has received
prior written notice of a security interest as provided for in
subdivision (1). A purchaser who fails to issue a jointly payable
check as required by this subsection is not protected by this
subdivision. A purchaser of farm products (on which there is a
perfected security interest) buying from a person engaged in
farming operations who withholds all or part of the proceeds of
the sale from the seller, in order to satisfy a prior debt ("prior
debt" does not include the costs of marketing the farm product or
the cost of transporting the farm product to the market) owed by
the seller to the buyer, commits a Class C infraction.
(b) Except as otherwise provided in subsection (e), 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:
(1) without knowledge of the security interest;
(2) for value;
(3) primarily for the buyer's personal, family, or household
purposes; and
(4) before the filing of a financing statement covering the goods.
(c) To the extent that it affects the priority of a security interest over
a buyer of goods under subsection (b), the period of effectiveness of a
filing made in the jurisdiction in which the seller is located is governed
by IC 26-1-9.1-316(a) and IC 26-1-9.1-316(b).
(d) 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.
(e) Subsections (a) and (b) do not affect a security interest in goods
in the possession of the secured party under IC 26-1-9.1-313.

Legislative History

As added by P.L.57-2000, SEC.45.