Fordyce Bank made several loans to Bean Timberland so it could buy timber from landowners. Bean would

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Fordyce Bank made several loans to Bean Timberland so it could buy timber from landowners. Bean would cut timber from owners' lands and sell the logs to Potlatch and Idaho Timber, which milled the logs into lumber. Bean gave the bank security interests in the timber, and the proceeds from its sale were to repay the loans. The bank perfected its interests by filing UCC financing statements with the Secretary of State's office.

1. The high court affirmed that the buyers of the timber had no duty to do a search for a security interest on the timber and were not liable to the bank, which lost its potential collateral. What is the logic of not having buyers in the ordinary course of business not do a search?
2. What could the bank have done to protect itself against this sort of outcome?

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The Legal Environment of Business

ISBN: 978-0538473996

11th Edition

Authors: Roger E Meiners, Al H. Ringleb, Frances L. Edwards

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