Code of Alabama

Ala. Code § 7-2-505 (2026)

Seller’s Shipment Under Reservation.

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

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(1) Where the seller has identified goods to the contract by or before shipment:

(a) His procurement of a negotiable bill of lading to his own order or otherwise reserves in him a security interest in the goods. His procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller’s expectation of transferring that interest to the person named.

(b) A nonnegotiable bill of lading to himself or his nominee reserves possession of the goods as security but except in a case of conditional delivery (subsection (2) of Section 7-2-507) a nonnegotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.

(2) When shipment by the seller with reservation of a security interest is in violation of the contract for sale, it constitutes an improper contract for transportation within Section 7-2-504, but impairs neither the rights given to the buyer by shipment and identification of the goods to the contract nor the seller’s powers as a holder of a negotiable document of title.

(Acts 1965, No. 549, p. 811; Act 2004-315, p. 464, §2.)

Notes of Decisions

Cited in 1 case, 2006–2006 · leading case: Jackson v. State, 953 So. 2d 1286 (Ala. Crim. App. 2006).

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Jackson v. State, 953 So. 2d 1286 (Ala. Crim. App. 2006). “Except as otherwise provided in Section 7-2-505, the right of a seller or lessor of goods under Article 2 or 2A to retain or acquire possession of the goods is not a ‘security interest,’ but a seller or lessor may also acquire a ‘security interest’ by complying with Article 9A.”

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