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C is corrent because Wills is a purchaser in the ordinary course of business and, consequently, takes the goods free of Town Bank’s perfected security interest in Cutter’s inventory.
A is incorrect because the parties to a secured transaction may specify that the security interest include the proceeds of the sale of the collateral.
B is incorrect because parties may stipulate that the security interest is to cover after-acquired property. Town Bank has created a floating lien concerning Cutter’s inventory.
D is incorrect because Black is a purchaser in the ordinary course of business and will defeat Town Bank’s prior perfected security interest in Cutter’s inventory. The fact that Black is purchasing for business purposes would not affect its status as purchaser in the ordinary course of business.