§ 41-09-50 — (9-330) Priority of purchaser of chattel paper or instrument

North Dakota § 41-09-50

• Jurisdiction: North Dakota
• Title 41: Uniform Commercial Code
• Ch. 41-09: Secured Transactions

Text

1. A purchaser of chattel paper has priority over a security interest in the chattel paper
which is claimed merely as proceeds of inventory subject to a security interest if:
a. In good faith and in the ordinary course of the purchaser's business, the
purchaser gives new value, takes possession of each authoritative tangible copy
of the record evidencing the chattel paper, and obtains control under section
41-09-05 of each authoritative electronic copy of the record evidencing the chattel
paper; and
b. The authoritative copies of the record evidencing the chattel paper do not indicate
that the chattel paper has been assigned to an identified assignee other than the
purchaser.
2. A purchaser of chattel paper has priority over a security interest in the chattel paper
which is claimed other than merely as proceeds of inventory subject to a security
interest if the purchaser gives new value, takes possession of each authoritative
tangible copy of the record evidencing the chattel paper, and obtains control under
section 41-09-05 of each authoritative electronic copy of the record evidencing the
chattel paper in good faith, in the ordinary course of the purchaser's business, and
without knowledge that the purchase violates the rights of the secured party.
3. Except as otherwise provided in section 41-09-47, a purchaser having priority in
chattel paper under subsection 1 or 2 also has priority in proceeds of the chattel paper
to the extent that:
a. Section 41-09-42 provides for priority in the proceeds; or
b. The proceeds consist of the specific goods covered by the chattel paper or cash
proceeds of the specific goods, even if the purchaser's security interest in the
proceeds is unperfected.
4. Except as otherwise provided in subsection 1 of section 41-09-51, a purchaser of an
instrument has priority over a security interest in the instrument perfected by a method
other than possession if the purchaser gives value and takes possession of the
instrument in good faith and without knowledge that the purchase violates the rights of
the secured party.
5. For purposes of subsections 1 and 2, the holder of a purchase-money security interest
in inventory gives new value for chattel paper constituting proceeds of the inventory.
6. For purposes of subsections 2 and 4, if the authoritative copies of the record
evidencing chattel paper or an instrument indicate that the chattel paper or instrument
has been assigned to an identified secured party other than the purchaser, a
purchaser of the chattel paper or instrument has knowledge that the purchase violates
the rights of the secured party.