70A-9a-330 - Priority of purchaser of chattel paper or instrument.
70A-9a-330. Priority of purchaser of chattel paper or instrument.
(1) A purchaser of chattel paper has priority over a security interest in the chattel paperwhich 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 purchasergives new value and takes possession of the chattel paper or obtains control of the chattel paperunder Section 70A-9a-105; and
(b) the chattel paper does not indicate that it has been assigned to an identified assigneeother than the purchaser.
(2) A purchaser of chattel paper has priority over a security interest in the chattel paperwhich is claimed other than merely as proceeds of inventory subject to a security interest if thepurchaser gives new value and takes possession of the chattel paper or obtains control of thechattel paper under Section 70A-9a-105 in good faith, in the ordinary course of the purchaser'sbusiness, and without knowledge that the purchase violates the rights of the secured party.
(3) Except as otherwise provided in Section 70A-9a-327, a purchaser having priority inchattel paper under Subsection (1) or (2) also has priority in proceeds of the chattel paper to theextent that:
(a) Section 70A-9a-322 provides for priority in the proceeds; or
(b) the proceeds consist of the specific goods covered by the chattel paper or cashproceeds of the specific goods, even if the purchaser's security interest in the proceeds isunperfected.
(4) Except as otherwise provided in Subsection 70A-9a-331(1), a purchaser of aninstrument has priority over a security interest in the instrument perfected by a method other thanpossession if the purchaser gives value and takes possession of the instrument in good faith andwithout 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 securityinterest in inventory gives new value for chattel paper constituting proceeds of the inventory.
(6) For purposes of Subsections (2) and (4), if chattel paper or an instrument indicatesthat it has been assigned to an identified secured party other than the purchaser, a purchaser of thechattel paper or instrument has knowledge that the purchase violates the rights of the securedparty.
Enacted by Chapter 252, 2000 General Session