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Business Law on Computer Purchases

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Watson buys a computer from a computer store, paying by check. The check then bounces. In the meantime, Watson has transferred the computer to Wilson. Under what conditions will Wilson prevail against the store if the store tries to recover the computer from him?

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Solution Summary

This in-depth solution of 671 explains the business law associated with the computer transaction and the transfer of the computer from Watson to Wilson. References used are included.

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Business Law
Watson buys a computer from a computer store, paying by check. The check then bounces. In the meantime, Watson has transferred the computer to Wilson. Under what conditions will Wilson prevail against the store if the store tries to recover the computer from him?

According to the General Rule of Titles and Third Party Sellers, "a seller cannot pass better title to goods than he has, (Barnes, Dworkin, Richards, 2004, p. 242)," which means that if Bill steals a stereo from John and sells it to Alice, Alice has no greater title to the stereo than Bill possessed. Therefore, John by law could recover the stereo from Alice, just as he could recover it from Bill.

The Code, however, does makes three important exceptions to this rule in order to protect the rights of innocent buyers (Barnes, Dworkin, Richards, 2004, p.242):

1. A person who ...

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