Entrustment Rule. Perez-Medina met Julio Lara at an auction at which they both bid on the same tractor. Perez-Medina purchased the tractor for 66,500. At a second auction, at which Lara was again present, Perez-Medina purchased equipment for installation on the tractor. Lara and Perez-Medina agreed that Lara would install the equipment for Perez-Medina at Lara's place of business, and the tractor was moved to Lara's shop. About four months later, Perez-Medina paid Lara 10,000 to make the installation. At that time, Perez-Medina thought Lara's business was a repair shop and not a business dealing in heavy equipment. Lara, however, often purchased and sold heavy equipment at auction, and many people knew that Lara was a dealer. Lara sold the tractor to First Team Auction, Inc, for 54,000, representing to First Team that he was the tractor's true owner. Perez-Medina had no knowledge of the sale and received no payment from the transaction. First Team then sold the tractor to a dealer, who in turn sold it to a consumer. When the truth of Lara's deed became known, the dealer and consumer rescinded their contracts with First Team. Should First Team be required to return possession of the tractor to Perez-Medina? If Lara was a merchant and First Team a buyer in the ordinary course of business, would your answer differ? Explain.
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