Also known as:qualifying purchasers · qualified purchaser
Written by attorneys · grounded in primary & secondary sources — see below
A purchaser of a controllable electronic record or an interest in a controllable electronic record that obtains control of the controllable electronic record for value, in good faith, and without notice of a claim of a property right in the controllable electronic record. The purchaser acquires its rights in the controllable electronic record free of a claim of a property right in the controllable electronic record. A qualifying purchaser of a controllable account or controllable payment intangible obtains control of the account or payment intangible by obtaining control of the controllable electronic record that evidences it.
Sources & Authorities· 8 primary sources
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Uniform Acts
Study Supplements
How it applies
Common Examples
2
Priority Over Perfected Security Interest
Ridge Environmental held a perfected security interest in Bright Environmental's receivables. Bright Environmental transferred a digital payment certificate evidencing a controllable account to Plains Sustainability in exchange for substantial value. Plains Sustainability obtained exclusive control of the certificate through a secure protocol while lacking actual knowledge of Ridge's claim. Plains Sustainability therefore qualifies as a qualifying purchaser and holds priority in the payment rights over Ridge's earlier perfected security interest.
Definition Cross-Reference in Article 9
Quinn Industries purchased a controllable electronic record from a seller for value. Quinn Industries obtained control of the record in good faith without notice of any property claim. The transaction satisfies the elements that Article 9 incorporates by reference when it defines qualifying purchaser under Section 12-102. Quinn Industries therefore acquires the record free of the seller's prior property claims.
Common questions
Frequently Asked
4
What elements must a purchaser satisfy to qualify as a qualifying purchaser?+
The purchaser must acquire a controllable electronic record or interest in one for value, in good faith, and without notice of a property right claim while obtaining control of the record. Control of a controllable account or controllable payment intangible is established by control of the evidencing controllable electronic record.
Supporting sources
What rights does a qualifying purchaser acquire in the controllable electronic record?+
A qualifying purchaser acquires its rights in the controllable electronic record free of any claim of a property right in the record. An action based on both the purchase and a property claim in another record may not be asserted against the qualifying purchaser.
Supporting sources
Does filing under Article 9 constitute notice that defeats qualifying purchaser status?+
Filing under Article 9 does not constitute notice of a claim or defense to a qualifying purchaser. A purchaser may still qualify even after reviewing public filings that reference an earlier security interest, provided the purchaser lacks actual knowledge of the adverse claim.
Supporting sources
How does the qualifying purchaser rule interact with an inventory lender's claim to chattel paper as proceeds?+
A qualifying purchaser of chattel paper that gives new value, acts in good faith and in the ordinary course, and takes possession or control of the authoritative copies takes priority over a security interest claimed merely as proceeds of inventory. The authoritative copies must not indicate assignment to an identified party other than the purchaser.
Supporting sources
Secured TransactionsRights of third parties; perfected and unperfected security interests; rules of priority (§ 9-301, et seq.) · Protection of buyers of goods and chattel paper (§§ 9-320, 9-330), including protection of holders and purchasers of negotiable instruments (§ 9-331)UBEFoundational