Sale on Approval and Sale or Return; Consignment 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)Except as provided in subdivision (3), 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)Where goods are delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return. The provisions of this subdivision are applicable even though an agreement purports to reserve title to the person making delivery until payment or resale or uses such words as “on consignment” or “on memorandum.” However, this subdivision is not applicable if the person making delivery

(a)Establishes that the person conducting the business is generally known by his creditors to be substantially engaged in selling the goods of others, or

(b)Complies with the filing provisions of the division on COL120106 DIV. 2 SALES secured transactions (Division 9.)

(4)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 division (Section 2201) and as contradicting the sale aspect of the contract within the provisions of this division on parol or extrinsic evidence (Section 2202).