Legal Definitions - BIOCOB

Definition: In the law of secured transactions, BIOCOB refers to a “buyer in the ordinary course of business.” There are certain elements that a buyer must meet to qualify as a BIOCOB. The buyer must purchase particular goods in good faith, without knowledge that the sale violates another individual's rights in the goods, and the buyer must buy the goods in the ordinary course of business from someone who sells that particular type of goods.

Example: Philko Aviation, Inc. v. Shacket 462 U.S. 406 103 S.Ct. 2476

Explanation: In this case, Philko Aviation purchased an airplane from a dealer who had obtained the plane from a previous owner who had defaulted on a loan. The previous owner's lender claimed that it had a security interest in the plane and sued Philko Aviation to recover it. The court found that Philko Aviation was a BIOCOB because it had purchased the plane in good faith, without knowledge of the lender's security interest, and from a dealer who regularly sold airplanes. Therefore, Philko Aviation was entitled to keep the plane, and the lender's claim was denied.