Upon Charlotte’s return from Florida, she sued to recover the car from Robert. Who has title to the automobile? Explain.

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Upon Charlotte’s return from Florida, she sued to recover the car from Robert. Who has title to the automobile? Explain.

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Charlotte, the owner of a new Cadillac automobile, agreed to loan the car to Ellen for the month of February while she (Charlotte) went to Florida for a winter vacation. It was understood that Ellen, who was a small-town Cadillac dealer, would merely place Charlotte’s car in her showroom for exhibition and sales promotion purposes. While Charlotte was away, Ellen sold the car to Robert. Upon Charlotte’s return from Florida, she sued to recover the car from Robert. Who has title to the automobile? Explain.

Explanation & AnswerSolution by a verified expert

Explanation

Section 2-403 (2) of the Uniform Commercial Code states that any burden of ownership of goods is of a trader, who may trade in goods of that kind. This gives the power to the trader to transfer all rights of the investor to a buyer, in the ordinary course of business. This condition is satisfied here. So, Person B may remain protected and Person C is not going to win the case against Person B.

Verified Answer

Here, the settlement may be in the favor of Person B. Person C, the owner of the car, willingly placed the automobile in a threatful bailment condition and entrusted it to Person E, a car trader, for showcasing it in the showroom. The Buyer, Person B, in the ordinary course of business is, therefore, protected.

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