Tex.
Bus. & Com. Code Section 2.402
Rights of Seller’s Creditors Against Sold Goods
(a)
Except as provided in Subsections (b) and (c), rights of unsecured creditors of the seller with respect to goods which have been identified to a contract for sale are subject to the buyer’s rights to recover the goods under this chapter (Sections 2.502 (Buyer’s Right to Goods on Seller’s Repudiation, Failure to Deliver, or Insolvency) and 2.716 (Buyer’s Right to Specific Performance or Replevin)).(b)
A creditor of the seller may treat a sale or an identification of goods to a contract for sale as void if as against him a retention of possession by the seller is fraudulent under any rule of law of the state where the goods are situated, except that retention of possession in good faith and current course of trade by a merchant-seller for a commercially reasonable time after a sale or identification is not fraudulent.(c)
Nothing in this chapter shall be deemed to impair the rights of creditors of the seller(1)
under the provisions of the chapter on Secured Transactions (Chapter 9 (Applicability of Law to Commercial Transactions)); or(2)
where identification to the contract or delivery is made not in current course of trade but in satisfaction of or as security for a pre-existing claim for money, security or the like and is made under circumstances which under any rule of law of the state where the goods are situated would apart from this chapter constitute the transaction a fraudulent transfer or voidable preference.(1)
the transferor was deceived as to the identity of the purchaser, or(2)
the delivery was in exchange for a check which is later dishonored, or(3)
it was agreed that the transaction was to be a “cash sale”, or(4)
the delivery was procured through fraud punishable as larcenous under the criminal law.(b)
Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.(c)
“Entrusting” includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor’s disposition of the goods have been such as to be larcenous under the criminal law.(d)
The rights of other purchasers of goods and of lien creditors are governed by the chapters on Secured Transactions (Chapter 9 (Applicability of Law to Commercial Transactions)) and Documents of Title (Chapter 7 (Receipts, Documents of Title, and Other Instruments)).
Source:
Section 2.402 — Rights of Seller's Creditors Against Sold Goods, https://statutes.capitol.texas.gov/Docs/BC/htm/BC.2.htm#2.402 (accessed Apr. 20, 2024).
