Answer the following: a. What is a bulk transfer, and under what part of the Code is it governed? b. Identify the central purpose of bulk sales law
a.
Section 6-102 of Article 6 of the UCC defines a bulk transfer as "any transfer in bulk and not in the ordinary course of the transferor's business of a major part of the materials, supplies, merchandise or other inventory." Article 6 and Revised Article 6 of the Code apply to bulk transfers or bulk sales.
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b. The main purpose of bulk sales law is to deter two common forms of commercial fraud. The first is when a merchant who owes 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 the business "through the back door" sometime in the future. The second is when a merchant who owes debts sells out his stock in trade to anyone for any price, pockets the proceeds, and disappears without paying his creditors.
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