Code of Alabama

Ala. Code § 7-2-501 (2026)

Insurable Interest in Goods; Manner of Identification of Goods.

✓ official Alabama Legislature (ALISON) text, current July 2026

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(1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are nonconforming and he has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement “identification” occurs:

(a) When the contract is made if it is for the sale of goods already existing and identified;

(b) If the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers;

(c) When the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within 12 months after contracting or for the sale of crops to be harvested within 12 months or the next normal harvest season after contracting whichever is longer.

(2) The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him and where the identification is by the seller alone he may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.

(3) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.

(Acts 1965, No. 549, p. 811.)

Notes of Decisions

Cited in 2 cases, 1981–2016 · leading case: In re Jones, 544 B.R. 692 (Bankr. M.D. Ala. 2016).

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In re Jones, 544 B.R. 692 (Bankr. M.D. Ala. 2016). · cites it 2× “CODE § 7-2-501(l)(a). “Unless otherwise explicitly agreed where delivery is to be made without moving the goods .”

In Re Sitkin Smelting & Refining, Inc. Eastman Kodak Co. v. G. M. Harrison, Tr. & C. I. T. Corp., 639 F.2d 1213 (5th Cir. 1981). “” Obviously, the film waste was “existing” at the time of contracting and clearly, as the film waste already had been delivered to Sitkin, the goods had been identified to the contract within the meaning of UCC § 2-501, Ala.Code § 7-2-501. Whether we choose to consider the…”

— Ala. Code § 7-2-501(l)(a) — 1 case

In re Jones, 544 B.R. 692 (Bankr. M.D. Ala. 2016). “CODE § 7-2-501(l)(a). “Unless otherwise explicitly agreed where delivery is to be made without moving the goods .”

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