Ark. Code Ann. § 4-2-401 (2026)
Passing of title — Reservation for security — Limited application of section
Each provision of this chapter with regard to the rights, obligations and remedies of the seller, the buyer, purchasers or other third parties applies irrespective of title to the goods except where the provision refers to such title. Insofar as situations are not covered by the other provisions of this chapter and matters concerning title become material the following rules apply:
- Title to goods cannot pass under a contract for sale prior to their identification to the contract (§ 4-2-501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this subtitle. Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of the chapter on secured transactions (Chapter 9 of this title), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.
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Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading
- if the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; but
- if the contract requires delivery at destination, title passes on tender there.
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Unless otherwise explicitly agreed where delivery is to be made without moving the goods:
- if the seller is to deliver a tangible document of title, title passes at the time when and the place where he delivers such documents and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or
- if the goods are at the time of contracting already identified and no documents of title are to be delivered, title passes at the time and place of contracting.
- A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Such revesting occurs by operation of law and is not a “sale”.
History. Acts 1961, No. 185, § 2-401; A.S.A. 1947, § 85-2-401; Acts 2007, No. 342, § 12.
Research References
Ark. L. Rev.
Commercial Law — Repossession of Chattels — Notice and Opportunity for Prior Hearings in Replevin, 26 Ark. L. Rev. 534.
Evolving Sales Law: Highlights of the Shifting Landscape of Arkansas Purchasing Law, 57 Ark. L. Rev. 835.
Case Notes
Evidence.
Trial court's finding as to when title passed was not clearly against preponderance of evidence. Merchants & Planters Bank & Trust Co. v. Phoenix Hous. Sys., 21 Ark. App. 153, 729 S.W.2d 433 (1987).
Execution of Contract.
Contract which stated that the seller fully understands that he or she is transferring title of the grain to the buyer and is relinquishing all control of the grain to the buyer was an explicit agreement by the parties that title would pass at the time the contract was excuted rather than at delivery of the crops. Cullipher v. Lindsey Rice Mill, Inc., 730 F. Supp. 970 (W.D. Ark. 1990).
In a Chapter 7 bankruptcy case, creditor did not convert the proceeds from the sale of two vacuum units when it credited the proceeds to an outstanding account, rather than forwarding the payment to debtor, and debtor should have pursued the case as a breach of contract because a sale was effectuated when an agreement was made since the units had already been delivered; creditor was entitled to exercise setoff under the circumstances, but was still liable for an amount that had not been credited or paid to debtor. Nat'l Hydro-Vac Indus. Servs., L.L.C. v. Fed. Signal Corp. (In re Nat'l Hydro-Vac Indus. Servs., L.L.C.), 314 B.R. 753 (Bankr. E.D. Ark. 2004).
Salvage Sale.
An insurance company's salvage sale of an aircraft passed title thereto to the buyer on delivery of the plane to him even though he was given no bill of sale, did not pay the purchase price, and did not obtain registration of the plane in his name with the Federal Aviation Agency. American Aviation, Inc. v. Aviation Ins. Managers, Inc., 244 Ark. 829, 427 S.W.2d 544 (1968).
Cited: Unlaub Co. v. Sexton, 568 F.2d 72 (8th Cir. 1977); Exchange Bank & Trust Co. v. Glenn's Marine, Inc., 265 Ark. 508, 579 S.W.2d 358 (1979); Hartford Fire Ins. Co. v. Stanley, 7 Ark. App. 94, 644 S.W.2d 628 (1983); In re Bearhouse, Inc., 84 B.R. 552 (Bankr. W.D. Ark. 1988); Reynolds v. Commodity Credit Corp., 300 Ark. 441, 780 S.W.2d 15 (1989); Beebe v. MacMillan Petro. (Ark.), Inc., 115 B.R. 175 (Bankr. W.D. Ark. 1990); Fraser Bros. v. Darragh Co., 316 Ark. 297, 871 S.W.2d 367 (1994); Mason v. Chenal Country Club, 2010 Ark. App. 180 (2010).