United Road Machinery Company, a dealer in heavy road equipment (including truck scales supplied by Thurman Scale Company), received a telephone call on July 21 from James Durham, an officer of Consolidated Coal Company, seeking to acquire truck scales for his coal mining operation. United and Consolidated entered into a twenty-four-month lease-purchase arrangement. United then notified Thurman that Consolidated would take possession of the scales directly. United paid for the scales and Consolidated took possession of them, but the latter never signed or returned the contract papers forwarded to it by United. Consolidated also never made any of the rental payments ($608/month) due under the lease. On September 20, Consolidated, through its officer Durham, sold the scales to Kentucky Mobile Homes for $8,500. Kentucky’s president, Ethard Jasper, checked the county records prior to the purchase and found no lien or encumbrance on the title; likewise, he denied knowledge of the dispute between Consolidated and United. On September 22, Kentucky sold the scales to Clyde Jasper, individually, for $8,500. His search also failed to disclose any lien on the title to the scales, and he denied knowledge of the dispute between Consolidated and United. Can United recover the scales from Jasper? Explain.
United Road Machinery Company, a dealer in heavy road equipment (including truck scales supplied by Thurman Scale Company), received a telephone call on July 21 from James Durham, an officer of Consolidated Coal Company, seeking to acquire truck scales for his coal mining operation. United and Consolidated entered into a twenty-four-month lease-purchase arrangement. United then notified Thurman that Consolidated would take possession of the scales directly. United paid for the scales and Consolidated took possession of them, but the latter never signed or returned the contract papers forwarded to it by United. Consolidated also never made any of the rental payments ($608/month) due under the lease. On September 20, Consolidated, through its officer Durham, sold the scales to Kentucky Mobile Homes for $8,500. Kentucky’s president, Ethard Jasper, checked the county records prior to the purchase and found no lien or encumbrance on the title; likewise, he denied knowledge of the dispute between Consolidated and United. On September 22, Kentucky sold the scales to Clyde Jasper, individually, for $8,500. His search also failed to disclose any lien on the title to the scales, and he denied knowledge of the dispute between Consolidated and United. Can United recover the scales from Jasper? Explain.
Case summary:
U company the dealer of heavy equipment entered into a lease agreement with C company. C company failed to sign on the contract papers and the rental payments were also outstanding. C company sold the leased equipment to K for a good consideration
Voidable contract:
A contract which is executable at the period of formation and it becomes invalid at the period of execution is termed as voidable contract In a contract of sale, if a buyer acquires the title in a fraudulent manner from the owner of the product and the seller may be unaware about the credibility of the buyer of the product The seller has right to reverse the contract if he identifies before the resale of the product In case if the buyer initiated a resale to a good faith purchaser the real owner of the goods loses his night of reversing the contract.
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