Asked by Amanda Nazimi on Jun 04, 2024
Verified
a. What is a bulk transfer?
b. What is the purpose of bulk sales law?
c. What is the effect of a failure to comply with the provisions in Article 6 in those states that still follow this Article?
Bulk Transfer
A term from commercial law referring to the transfer of all or a substantial part of a business's inventory or equipment in one transaction.
Bulk Sales Law
Laws designed to protect creditors by requiring business owners to provide notice before transferring or selling a large part of their inventory or assets outside of the regular course of business.
Article 6
A reference that may pertain to a specific clause within a legal document or constitution, requiring context for an accurate definition.
- Comprehend the purpose and impact of bulk sales law and its provisions.
Verified Answer
TE
Thiago EnriqueJun 08, 2024
Final Answer :
a. A bulk transfer is a merchant's transfer, not in the ordinary course of the transferor's business, of a major part of his materials, supplies, merchandise, or other inventory at once.
b. The central purpose of bulk sales law is to deter two common forms of commercial fraud. One occurs when the merchant, owing debts, sells out his stock in trade to a friend for a low price, pays his creditors less than he owes them, and hopes to come back into business in the future. A second form of commercial fraud is when the merchant, owing debts, sells out his stock in trade to anyone for any price, pockets the proceeds, and disappears without paying his creditors.
c. The effect of a failure to comply with the requirements of Article 6 of the Code is that the goods in the possession of the transferee continue to be subject to the claims of unpaid creditors of the transferor.
b. The central purpose of bulk sales law is to deter two common forms of commercial fraud. One occurs when the merchant, owing debts, sells out his stock in trade to a friend for a low price, pays his creditors less than he owes them, and hopes to come back into business in the future. A second form of commercial fraud is when the merchant, owing debts, sells out his stock in trade to anyone for any price, pockets the proceeds, and disappears without paying his creditors.
c. The effect of a failure to comply with the requirements of Article 6 of the Code is that the goods in the possession of the transferee continue to be subject to the claims of unpaid creditors of the transferor.
Learning Objectives
- Comprehend the purpose and impact of bulk sales law and its provisions.