Bulk Sales Laws: A Study in Economic Adjustment

Abstract

Joseph Johnson operates a men's clothing store in a rented storeroom along Market Street in the town of X. He has a stock of goods valued in his property statement at $3000. Harry Jackson, credit manager for the T supply house, extends Johnson credit and fills his orders up to $iooo. Ten days after these goods have been delivered, Jackson learns that Johnson has sold out his business lock, stock, and barrel to Fred Brown for $2000, has invested the money in an automobile, and has left in the car for an undisclosed destination. An investigation reveals that Johnson has no other assets than the automobile, and that, at the time of the transfer of the stock of goods, Johnson gave Brown positive assurance that the business was free from debt. On the statute books of the forty-eight states there are enactments describing, sometimes in great detail, the conditions which both Johnson and his vendee must meet before the former legally can transfer his stock of goods in bulk. While these statutes vary as regards specific provisions, four general types have been evolved.2 I. The so-called New York form has been the model for the bulk sales statutes in thirty-three jurisdictions.31 This type of