Why are stolen goods that are sold to a bona fide purchaser returned to the original...

Why are stolen goods that are sold to a bona fide purchaser returned to the original owner, but goods that are obtained by fraud that are sold to bona fide purchasers stay with the purchasers? Explain and justify the difference.

Solutions

Expert Solution

A fundamental principle of common law is that an person can not transfer a better title than she has, and a buyer may obtain no better title than the seller's. A thief has no title in stolen goods, and a person who buys from the thief won't get title.

A bona fide buyer is a person who has purchased property for sale without warning of any defects in the seller's title. If a seller suggests to a buyer that it has ownership or authority to sell a specific item, then the seller is prevented (stopped) from refusing these representations if the buyer resells the property for sale to a bona fide buyer without knowledge of the rights of the true owner. Such an estoppel did not apply in common law when an owner took an item of that form of goods to a dealer for services or repairs and the dealer sold the chattel unjustly. Nevertheless, under these situations the bona fide buyer is now covered by the Uniform Commercial Code (UCC).

A buyer who uses false claims to compel a sale acquires a voidable title from the seller. A voidable title is one that the seller can, at his option, vacate upon discovery of the buyer's fraud. The seller has the right to move a good title without notice of the outstanding equity to a bona fide buyer for the interest. The voidable title rule applies only in cases where the owner is compelled, as a result of fraud or deceit, to part with title, not merely with ownership.

Rahul Sunny answered 1 week ago

Next > < Previous

Related Solutions

Sold goods to Elsa traders on credit with an original selling price of R3 542. A...

Sold goods to Elsa traders on credit with an original selling price of R3 542. A trade discount of 5% was awarded and still needs to be taken into account.

Identify who bears the risk of loss when goods are stolen and resold？

On 2/1/YR 1, the Seller delivered goods to the Purchaser in the amount of $7,000 which...

On 2/1/YR 1, the Seller delivered goods to the Purchaser in the amount of $7,000 which are not to the Purchaser's specifications. At the time of the delivery of the goods, the Purchaser had not yet paid for the goods, and the Purchaser planned to pay for them in 3/1/YR 1 (i.e., the following month) in accordance with the credit terms offered by the Seller. Identifying that the goods are not conforming, the Purchaser, on 2/2/YR 1, returns to the...

When merchandise previously sold to a customer is returned, the journal entry is ...

Why can the computation of cost of goods sold be problematic in process costing? Are the...

Why can the computation of cost of goods sold be problematic in process costing? Are the product costs accounted for the same way in process costing as they are in job order costing?

Cost of goods sold:

ABC Corporation reported the following data for the month of January: Inventories: Beginning Ending Raw materials 46,000 34,000 Work in process 31,000 29,000 Finished goods 27,000 55,000 Additional information: Raw materials purchases 79,000 Direct labor cost 93,000 Manufacturing overhead cost incurred 54,000 Indirect materials included in manufacturing overhead cost incurred 8,000 Manufacturing overhead cost applied to Work in Process 57,000 Calculate cost of goods sold during the month of January?

Why is it more difficult and riskier to collect receivables from a foreign purchaser?

1. To adjust a company’s LIFO cost of goods sold to FIFO cost of goods sold...

1. To adjust a company’s LIFO cost of goods sold to FIFO cost of goods sold the ending LIFO reserve is added to LIFO cost of goods sold. the ending LIFO reserve is subtracted from LIFO cost of goods sold. an increase in the LIFO reserve is subtracted from LIFO cost of goods sold. a decrease in the LIFO reserve is subtracted from LIFO cost of goods sold. 2. All of the following statements are true regarding the LIFO reserve...

Cost of Goods Sold is calculated on the:

Question 11 2.5 pts Cost of Goods Sold is calculated on the: Income Statement. Statement of Owner's Equity. Post-Closing Trial Balance. Trial Balance. Question 12 2.5 pts The current balance of Allowance for Doubtful Accounts is considered when calculating the current period's Bad Debts Expense under the following approach: Direct write-off method Income statement approach All of these answers are correct. Balance sheet approach Question 13 2.5 pts Joe's Auto Repair estimates that approximately 3% of net credit...

Calculation of Cost of Goods Sold: Periodic Inventory System Prepare the cost of goods sold section...

Calculation of Cost of Goods Sold: Periodic Inventory System Prepare the cost of goods sold section for Adams Gift Shop. The following amounts are known: Beginning merchandise inventory $27,050 Ending merchandise inventory 22,550 Purchases 77,125 Purchases returns and allowances 4,055 Purchases discounts 5,745 Freight-in 230 Adams Gift Shop Cost of Goods Sold Cost of goods sold: $ $ $ $ $ Cost of goods sold $

Subjects