Sale on Approval and Sale or Return — Consignment Sales and Rights of Creditors

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  2. Tennessee Code
  3. Commercial Instruments and Transactions
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  5. General Obligation and Construction of Contract
  6. Sale on Approval and Sale or Return — Consignment Sales and Rights of Creditors

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  1. Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is:
  1. a “sale on approval” if the goods are delivered primarily for use, and
  2. a “sale or return” if the goods are delivered primarily for resale.

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.

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 chapter (§47-2-201) and as contradicting the sale aspect of the contract within the provisions of this chapter on parol or extrinsic evidence (§47-2-202).


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