Property I

Equitable Estoppel

Equitable estoppel prevents the true owner of property from asserting the derivative title principle and recovering possession.

Courts traditionally only impose equitable estoppel against a true owner when the owner has created a bailment relationship in which the bailee was clothed with "indicia of title."

The UCC also added the voidable title provision and the entrustment rule:

Voidable Title

A voidable title is a valid title that can be voided.

Voidable title is usually acquired by fraud or duress.

A person with a voidable title has the power to transfer a good title to a good faith purchaser for value.

Entrustment Rule
UCC § 2-403
UCC § 2-403
  • Any entrusting of goods to a merchant that deals in goods of that kind gives the merchant power to transfer all of the entruster's rights to the good and to transfer the goods free of any interest of the entruster to a buyer in ordinary course of business.
  • "Entrusting" includes and 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 was punishable under the criminal law.
    • Copyright, The American Law Institute
    Copyright, The American Law Institute

    Merchant still cannot transfer rights that the entruster did not have the power to give.