Okla. Stat. tit. 12A § 1-9-319

Current through Laws 2024, c. 378.

Section 1-9-319 - Rights and title of consignee with respect to creditors and purchasers

(a) Except as otherwise provided in subsection (b) of this section, for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer.

(b) For purposes of determining the rights of a creditor of a consignee, law other than this article determines the rights and title of a consignee while goods are in the consignee's possession if, under this part, a perfected security interest held by the consignor would have priority over the rights of the creditor.

Okla. Stat. tit. 12A, § 1-9-319

Added by Laws 2000 , SB 1519, c. 371, § 39, eff. 7/1/2001.

Oklahoma Code Comment

This section must be read in conjunction with sections 9-102(a)(20) , 9- 109(a)(4) , 9-103(d) and 2-326. These sections continue the rule that title to the goods is immaterial. The substance of the transaction will determine its treatment. Morton Booth Co. v. Tiara Furniture, Inc., 564 P2d 210 (1977). See generally Alvin C. Harrell, Sales B Related Conflicts Between Articles 2 and 9, 22 U.C.C. L.J. 134 (1989).

There are two types of sales with return features: "sale on approval" and "sale or return." Sale on approval is a delivery to the buyer so that the buyer may use the goods to determine if it wants to buy. The sale is not complete until the buyer accepts the goods. Such a sale is subject to UCC Article 2 and not Article 9. See UCC section 2-326 . Sale or return is the delivery of goods to the buyer for resale by the buyer, with the agreement of the seller that the seller will take back unsold goods in lieu of payment. This type of sale is also not subject to Article 9. See section 2-326 . However, a consignment for sale that meets the requirements of revised section 9-102(a)(20) is covered for purposes of Article 9 and section 9-319 even though it resembles a sale or return.

Generally, a delivery of goods to a merchant for sale will constitute a consignment covered by section 9-319, subject to exceptions at section 9- 102(a)(20) . Note that not all deliveries of goods to a merchant will result in Article 9 coverage. For example, a bailment not for sale is outside Article 9. See section 9-102(a)(20) ; Harrell, supra. A consignment also can be a disguised secured transaction. In Morton Booth, Morton Booth transferred materials to Tiara Furniture for the fabrication of gun cases. When the gun cases were completed, Morton Booth bought the gun cases at a reduced price. The court held that this transaction was a secured transaction under Article 9 and thus that the materials were subject to the claims of Tiara Furniture's inventory secured lenders. It appears that if Morton Booth had delivered the materials to Tiara Furniture for fabrication and Morton Booth paid for the fabrication, as opposed to receiving a discounted price when it repurchased the transaction would have been a bailment not subject to Article 9. Providing seed potatoes to growers who are paid for growing crops, and delivering cattle to a feedlot which is paid for feeding, are additional examples of transactions that may not be subject to Article 9 if no sale is in the picture.