Purchase of Chattel Paper and Instruments

Purchase of Chattel Paper and Instruments. A purchaser of chattel paper or an instrument who gives new value and takes possession of it in the ordinary course of his business has priority over a security interest in the chattel paper or instrument: (a) Which is perfected under 5 CMC §§ 9304 (permissive filing and temporary perfection) or 9306 (perfection as to proceeds) if he acts without knowledge that the specific paper or instrument is subject to a security interest; or (b) Which is claimed merely as proceeds of inventory subject to a security interest (5 CMC § 9306) even though he knows that the specific paper or instrument is subject to the security interest. Source: PL 3-56, § 1 (§ 9308).