Also known as: ordinary businesses · ordinary course of business
Written by attorneys · grounded in primary & secondary sources — see below
An activity or practice that forms part of the regular and customary operations of a business entity. The concept identifies conduct that aligns with established commercial routines rather than extraordinary or policy-level decisions.
Odin Obeng purchased inventory from Optima Health, a medical supplier that had granted a security interest in its stock to a lender. Obeng bought the goods during normal retail hours at posted prices without any special arrangement. Because the purchase occurred in the ordinary course of Optima Health's business, Obeng acquired the items free of the lender's perfected security interest.
Orion Orlov, a partner in Orbit Communications, negotiated a routine service contract with a client while acting within the firm's standard client-acquisition practices. The deal later caused a client to incur losses from delayed deliveries. The partnership became liable for the resulting damages because Orlov's conduct occurred in the ordinary course of the firm's business.
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Oswald Orozco responded to a subpoena for Oceanview Properties' maintenance records by delivering the files exactly as they were stored in the company's electronic filing system. The records had never been reorganized or labeled to match the subpoena categories. Production in this manner satisfied the requirement to produce documents as kept in the ordinary course of business.
Olivia Owens and two other partners in Osprey Aviation voted to increase the number of weekly training flights after reviewing seasonal demand data. The change stayed within the firm's established flight-scheduling practices and did not alter the partnership agreement. A majority vote sufficed because the decision concerned a matter arising in the ordinary course of the aviation business.
Omar Olson and the board of Optima Health decided against declaring an immediate dividend despite strong earnings, choosing instead to retain funds for routine equipment upgrades. Minority shareholders challenged the decision as self-dealing. The court applied the business judgment rule because the retention decision fell within ordinary business operations rather than a self-dealing transaction.
Opal Okoro received shares in a tribal development corporation subject to a legend restricting transfers to nonmembers. The restriction appeared on every certificate issued in the entity's regular formation process. The warning reflected the corporation's ordinary business practice of preserving shares for the benefit of members and their families rather than creating an atypical encumbrance.
Yes. Under the governing rule a buyer in ordinary course of business takes free of a security interest created by the seller even when the buyer knows of the interest's existence and even when the interest is perfected.
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A partnership is liable when the partner acts in the ordinary course of the partnership's business or with actual or apparent authority of the partnership. The liability extends to loss, injury, or penalties resulting from the partner's actionable conduct.
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The recipient must produce documents as they are kept in the ordinary course of business or organize and label them to correspond to the categories in the demand. Production in the form ordinarily maintained satisfies the rule when no specific form is requested.
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An act outside the ordinary course of business requires the affirmative vote or consent of all partners. Matters arising in the ordinary course may be decided by a majority of the partners.
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The business judgment rule protects ordinary business decisions that do not involve self-dealing by a controlling shareholder. Decisions that constitute self-dealing trigger entire fairness review instead.
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…In addition, each certificate had on its face, in red lettering, a warning that the certificate did not represent stock in an ordinary business corporation, that its future value or return could not be determined, and that the stock should not be sold or encumbered by its owner, but should be retained and preserved for the benefit…