Okla. Stat. tit. 12A § 2-326

Current through Laws 2024, c. 378.

Section 2-326 - Sale on Approval and Sale or Return; Consignment Sales and Rights of Creditors

(1) Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is

(a) a "sale on approval" if the goods are delivered primarily for use, and

(b) a "sale or return" if the goods are delivered primarily for resale.

(2) Goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer's possession.

(3) Any "or return" term of a contract for sale is to be treated as a separate contract for sale within the statute of frauds section of this article (Section 2-201 of this title) and as contradicting the sale aspect of the contract within the provisions of this article on parole or extrinsic evidence (Section 2-202 of this title).

Okla. Stat. tit. 12A, § 2-326

Laws 1961, SB 36, p. 85, § 2-326; Amended by Laws 2000 , SB 1519, c. 371, § 150, eff. 7/1/2001.

Oklahoma Code Comment

(1) Under the Uniform Sales Act (not enacted by Oklahoma) and previous prevailing case law, the determination of whether a transaction, in which one in possession of goods had the option to return in lieu of payment of the purchase price, was a "sale on approval" or a "sale or return" depended upon the intent of the parties. Intent is often difficult to determine, and many conflicting opinions arose. The Commercial Code simplifies the issue by creating a presumption that goods delivered to a consumer creates a "sale on approval," but those delivered to a merchant for resale creates a "sale or return." The presumption prevails unless the parties otherwise agree. Therefore, if the contract is ambiguous and does not clearly specify the intent of the parties, the presumption prevails. The official comment states that this section is consistent with commercial understanding. See 12 Okl.Digest Sales 204, sale on trial or approval, and 205, contract for sale or return.

(2) This is consistent with previous Oklahoma decisions that in "sale on approval" title remains with the vendor, and in "sale or return," title vests in the vendee. Johnson v. Curlee Clothing Co., 112 Okl. 220, 240 P. 632 (1925) . There have been no previous Oklahoma decisions involving creditors of either party.

(3) This section changes Oklahoma law. Its purpose is to protect the creditors of a merchant who appears to be the owner of the inventory, but which in fact is held on consignment. Linton v. Citizens State Bank, Okl., 361 P.2d 1071 (1961), which held in favor of a seller on consignment and against a mortgagee from the consignee, is reversed by this section. Oklahoma does not have a statutory provision for displaying a sign which would protect the rights of the consignor.

(4) Previous Oklahoma law is in accord. Colcord v. Dryfus, 1 Okl. 228, 32 P. 329 (1893).