A merchant buyer has a heightened duty of inquiry when a reasonable merchant would have doubts or questions regarding the seller's authority to sell. The steps that a merchant must take to conform to reasonable commercial standards before consummating a deal depend on all of the facts and circumstances surrounding the sale.
Plaintiff claimed that she purchased the painting "Red Elvis" through a dealer. The dealer later sold the painting to defendant, and plaintiff claimed that the sale was not authorized. The trial court found that defendant was a buyer in the ordinary course of business pursuant to Conn. Gen. Stat. § 42a-2-403, under which defendant took all of plaintiff's rights to the painting. The appellate court held that because of his concern that plaintiff might make a claim to the painting, defendant took the extraordinary step of hiring counsel to conduct an investigation and to negotiate a formal contract of sale on his behalf. He also insisted on and obtained a formal contract containing representations and warranties that the dealer had title to the painting.
Is the defendant considered a buyer in the ordinary course of business?
The appellate court found that the evidence presented at trial established that the reason that documentary proof of ownership customarily was not required in art sales was to protect the confidentiality of the owner and buyer. The appellate court held that the evidence was sufficient for the trial court to reasonably conclude that the dealer had a reputation for honesty and reliability. Thus, the trial court correctly determined that defendant was a buyer in the ordinary course of business.