Ky. Rev. Stat. » Chapter 355
Kentucky Revised Statutes

Ky. Rev. Stat. § 355.2-326 (2026)

Sale on approval and sale or return -- Rights of creditors

✓ current as of May 2026
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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:

(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) 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) 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 article (KRS 355.2-201) and as contradicting the sale aspect of the contract within the provisions of this article on parol or extrinsic evidence (KRS 355.2-202). Effective: July 1, 2001 History: Amended 2000 Ky. Acts ch. 408, sec. 160, effective July 1, 2001. -- Created 1958 Ky. Acts ch. 77, sec. 2-326, effective July 1, 1960.

Notes of Decisions
Cited in 4 cases, 1963–1998 · leading case: Spurlin v. Sloan, 368 S.W.2d 314 (Ky. Ct. App. 1963).
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Spurlin v. Sloan, 368 S.W.2d 314 (Ky. Ct. App. 1963). “Unless a lease or consignment is intended as security, reservation of title thereunder is not a ‘security interest’ but a consignment is in any event subject to the provisions on consignment sales (KRS 355.2-326), Whether a lease is intended as security is to be determined by…”
Hamilton Bank of Morristown v. Bank of Com. (In Re Morristown Lincoln-Mercury, Inc.), 25 B.R. 377 (Bankr. E.D. Tenn. 1982). “Ky.Rev.Stat.Ann. § 355.2-326(1) (1972) provides in part: “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 .”
Brown v. Foley (In Re Brown), 213 B.R. 317 (Bankr. W.D. Ky. 1997). · cites it 2× “See, Ky.Rev.Stat. Ann. § 355.2-326. Brown testified that there was no sign or other notice to third parties that any of the inventory in Brown’s store belonged to Foley.”
Reisz v. Newcomb Oil Co. (In re Andaco, Inc.), 226 B.R. 578 (Bankr. W.D. Ky. 1998). “KRS 355.2-326(3) (emphasis supplied). In the case at bar, it is undisputed that the Debtor, Andaco, sold the motor fuel on a consignment basis, possessing no ownership interest at any time in that property.”
— Ky. Rev. Stat. § 355.2-326(1) — 1 case
Hamilton Bank of Morristown v. Bank of Com. (In Re Morristown Lincoln-Mercury, Inc.), 25 B.R. 377 (Bankr. E.D. Tenn. 1982). “Ky.Rev.Stat.Ann. § 355.2-326(1) (1972) provides in part: “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 .”
— Ky. Rev. Stat. § 355.2-326(3) — 1 case
Reisz v. Newcomb Oil Co. (In re Andaco, Inc.), 226 B.R. 578 (Bankr. W.D. Ky. 1998). “KRS 355.2-326(3) (emphasis supplied). In the case at bar, it is undisputed that the Debtor, Andaco, sold the motor fuel on a consignment basis, possessing no ownership interest at any time in that property.”
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