Also known as: ordinary course rules · ordinary course of business
Written by attorneys · grounded in primary & secondary sources — see below
A standard or practice that aligns with the routine operations and customary dealings of a business or entity. It determines whether a transaction or act receives special legal protection or treatment under statutes and rules that reference ordinary business conduct.
Orion Technologies sells a used router to Oceanview Properties. Oceanview pays value, takes possession, and has no actual knowledge that the router is subject to a perfected security interest held by Olympus Banking. Because the sale occurs in the ordinary course from a seller in the business of dealing in such goods, Oceanview takes the router free of the security interest even though the interest is perfected.
Omar Olson, a partner in Orchard Farms, negligently damages a neighbor's fence while driving a partnership tractor to inspect crops. The act occurs during regular farm operations and within the apparent authority of the partnership. The partnership is therefore liable for the resulting loss or penalty.
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Odin Obeng receives a subpoena to produce billing records in a contract dispute. He produces the electronic files exactly as they are stored on his company's servers in the ordinary course of business without reorganization or labeling. The production satisfies the subpoena requirements.
Owen Ortega and two other partners in Oceanview Properties vote to purchase new office supplies during a regular meeting. The purchase is a matter arising in the ordinary course of the partnership's business. The decision binds the partnership even though one partner dissents.
The rule allows a buyer in ordinary course to take goods free of a security interest created by the seller even if the interest is perfected and the buyer knows of its existence, provided the buyer is not purchasing farm products from a farming operation.
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The partnership is liable when the partner acts in the ordinary course of the partnership business or with actual or apparent authority of the partnership, causing loss or injury to a third person.
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A responding party may produce documents as they are kept in the ordinary course of business rather than organizing and labeling them to match the categories in the demand.
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A difference arising as to a matter in the ordinary course of business may be decided by a majority of the partners, while acts outside the ordinary course require unanimous consent.
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