TITLE, CREDITORS AND GOOD FAITH PURCHASERS

MCL ch. 440, subtit. Act 174 of 1962, art. 2, pt. 4

in effect

MCL 440.2401 Passing of title; reservation for security; limited application of section; rejection; revesting.

440.2401. Passing of title; reservation for security; limited application of section; rejection; revesting. Sec. 2401. Each provision of this article with regard to the rights, obligations, and remedies of the seller, the buyer, purchasers, or other third parties applies irrespective of title to the goods except where the provisions refers to the title. In situations that are not covered by the other provisions of this article and matters concerning title become material, the following rules apply: (a) Title to goods cannot pass under a contract for sale before their identification to the contract under section 2501, and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this act. Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of article 9, title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties. (b) Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes its performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even if a document of title is to be delivered at a different time or place. In particular and despite any reservation of a security interest by the bill of lading, both of the following apply: (i) Unless subparagraph (ii) applies, if the contract requires or authorizes the seller to send the goods to the buyer but does not require the seller to deliver them at destination, title passes to the buyer at the time and place of shipment. (ii) If the contract requires delivery at destination, title passes on tender there. (c) Unless otherwise explicitly agreed where delivery is to be made without moving the goods, 1 of the following applies: (i) If the seller is to deliver a tangible document of title, title passes at the time when and the place where the seller delivers the document of title. (ii) If the seller is to deliver an electronic document of title, title passes when the seller delivers the document. (iii) If the goods are at the time of contracting already identified and no documents of title are to be delivered, title passes at the time and place of contracting. (d) A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Revesting of title under this subdivision occurs by operation of law and is not a "sale". 1962, Act 174, Eff. Jan. 1, 1964; Am. 2012, Act 87, Eff. July 1, 2013

MCL 440.2402 Rights of seller's creditors against sold goods.

440.2402. Rights of seller's creditors against sold goods. Sec. 2402. (1) Except as provided in subsections (2) and (3), 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 article (sections 2502 and 2716). (2) 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. (3) Nothing in this article shall be deemed to impair the rights of creditors of the seller (a) under the provisions of the article on secured transactions (article 9); or (b) 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 article constitute the transaction a fraudulent transfer or voidable preference. 1962, Act 174, Eff. Jan. 1, 1964

MCL 440.2403 Purchasers and transferees; title, rights, and powers to transfer goods; entrusting.

440.2403. Purchasers and transferees; title, rights, and powers to transfer goods; entrusting. Sec. 2403. (1) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though (a) the transferor was deceived as to the identity of the purchaser; or (b) the delivery was in exchange for a check which is later dishonored; or (c) it was agreed that the transaction was to be a "cash sale"; or (d) the delivery was procured through fraud punishable as larcenous under the criminal law. (2) 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. (3) "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. (4) The rights of other purchasers of goods and of lien creditors are governed by the articles on secured transactions (article 9), bulk transfers (article 6) and documents of title (article 7). 1962, Act 174, Eff. Jan. 1, 1964

Source: Michigan Legislature (legislature.mi.gov)URL: https://legislature.mi.gov/documents/mcl/Chapter%20440.xmlFetched: 10/20/2026