Brown & Co. was unaware of “Brown’s” transaction with Smith. Can Smith successfully sue Brown & Co. for either the return of the gems or the price as billed to Brown & Co.? Explain.

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Brown & Co. was unaware of “Brown’s” transaction with Smith. Can Smith successfully sue Brown & Co. for either the return of the gems or the price as billed to Brown & Co.? Explain.

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Smith was approached by a man who introduced himself as Brown of Brown & Co. Brown was not known to Smith, but Smith asked Dun & Bradstreet for a credit report and obtained a very favorable report on Brown. He thereupon sold Brown some expensive gems and billed Brown & Co. “Brown” turned out to be a clever jewel thief, who later sold the gems to Brown & Co. for valuable consideration. Brown & Co. was unaware of “Brown’s” transaction with Smith. Can Smith successfully sue Brown & Co. for either the return of the gems or the price as billed to Brown & Co.? Explain.

Explanation & AnswerSolution by a verified expert

Explanation

The undertaking between Person S and the impostor resulted in the latter procuring a rescindable title to the precious stones. Section 2-403 (1) (a), which provides a person with the revocable title, has the authority to shift the goods title to a good faith buyer for an amount. Under such an agreement of acquisition, the purchaser has the authority to transfer the title of the goods, even though purchase is made under fraud and by an imposter. Because of these facts, Company B may be a good reliance for value.

Verified Answer

In this case, Person S may not charge against Company B because the company is a good credence consumer for services. Person S has planned to advance the title of the solitaire to the man physically, who was a precious stone robber and a fraud pretending to be Company B.

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