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srilawsby aturio
As enacted
Contents

Part IV · Perfection

34. Transactions in the ordinary course of business

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

A buyer of goods from a seller who sells the goods in the ordinary course of business, takes them free of any security right therein given by the seller, even though it is perfected and the buyer knows of it, unless the buyer was also aware that the sale constituted a breach of the security agreement.

(2)

The provisions of subsection (1) shall become applicable, whether or not-

(a)

the buyer took possession of the goods;

(b)

the seller was in possession of the goods at any time;

(c)

the title to the goods passed to the buyer;

or

(d)

the seller took a security right in the goods.

(3)

In a lease of goods by a lessor who leases goods in the ordinary course of business, the lessee holds the goods to the extent of the lessee’s rights under the lease free from any security right therein given by the lessor, unless the lessee was also aware that the lease constituted a breach of the security agreement.

(4)

The provisions of subsection (3) applies, whether or not-

(a)

the lessee took possession of the goods;

or

(b)

the lessor was in possession of the goods at any time.

(5)

A purchaser of chattel paper who takes possession of it in the ordinary course of business and gives new value, has priority over any security right in it that-

(a)

was perfected by registration, if the purchaser was not aware at the time of taking possession that the chattel paper was subject to a security right; or

(b)

has attached to proceeds of an inventory under section 31, whatever the extent of the purchaser’s awareness.

(6)

A purchaser of collateral that is an instrument or negotiable document of title, has priority over any security right therein perfected by registration or temporarily perfected under section 31 or 32, if the purchaser-

(a)

gave value for the collateral purchased;

(b)

purchased the collateral without knowledge that it was subject to a security right; and

(c)

has taken possession of the collateral.

Read on from s 35

Part V

Priorities

Read on from Part V

Part VI

Registration

Read on from Part VI

Part VII

General Provisions

Read on from Part VII

Part VIII

Repeals and Savings

Read on from Part VIII

Part IX

Interpretation

Read on from Part IX