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Texas Business & Commerce Code - Section 9.330. Priority Of Purchaser Of Chattel Paper Or Instrument

Legal Research Home > Texas Laws > Business & Commerce Code > Texas Business & Commerce Code - Section 9.330. Priority Of Purchaser Of Chattel Paper Or Instrument

§ 9.330. PRIORITY OF PURCHASER OF CHATTEL PAPER OR 
INSTRUMENT.  (a) A purchaser of chattel paper has priority over a 
security interest in the chattel paper that is claimed merely as 
proceeds of inventory subject to a security interest if:
		(1)  in good faith and in the ordinary course of the 
purchaser's business, the purchaser gives new value and takes 
possession of the chattel paper or obtains control of the chattel 
paper under Section 9.105;  and
		(2)  the chattel paper does not indicate that it has 
been assigned to an identified assignee other than the purchaser.
	(b)  A purchaser of chattel paper has priority over a 
security interest in the chattel paper that is claimed other than 
merely as proceeds of inventory subject to a security interest if 
the purchaser gives new value and takes possession of the chattel 
paper or obtains control of the chattel paper under Section 9.105 in 
good faith, in the ordinary course of the purchaser's business, and 
without knowledge that the purchase violates the rights of the 
secured party.
	(c)  Except as otherwise provided in Section 9.327, a 
purchaser having priority in chattel paper under Subsection (a) or 
(b) also has priority in proceeds of the chattel paper to the extent 
that:
		(1)  Section 9.322 provides for priority in the 
proceeds;  or               
		(2)  the proceeds consist of the specific goods covered 
by the chattel paper or cash proceeds of the specific goods, even if 
the purchaser's security interest in the proceeds is unperfected.
	(d)  Except as otherwise provided in Section 9.331(a), a 
purchaser of an instrument has priority over a security interest in 
the instrument perfected by a method other than possession if the 
purchaser gives value and takes possession of the instrument in 
good faith and without knowledge that the purchase violates the 
rights of the secured party.
	(e)  For purposes of Subsections (a) and (b), the holder of a 
purchase-money security interest in inventory gives new value for 
chattel paper constituting proceeds of the inventory.
	(f)  For purposes of Subsections (b) and (d), if chattel 
paper or an instrument indicates that it has been assigned to an 
identified secured party other than the purchaser, a purchaser of 
the chattel paper or instrument has knowledge that the purchase 
violates the rights of the secured party.

Added by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1, 
2001.       

Last modified: August 11, 2007