Tennessee Code Annotated
Tenn. Code Ann. § 47-2-326 (2026)
Sale on approval and sale or return - Consignment sales and rights of creditors
✓ current as of May 2026
- (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 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).
Acts 1963, ch. 81, § 1 (2-326); 2000, ch. 846, § 6.
Notes of Decisions
Cited in 11
cases, 1978–2010 · leading case: In Re Music City RV, LLC, 304 S.W.3d 806 (Tenn. 2010).
In Re Music City RV, LLC, 304 S.W.3d 806 (Tenn. 2010). “Tenn.Code Ann. § 47-2-326 (1996 & 2000 Supp.”
Edmondson v. Caldwell (In Re Phippens), 4 B.R. 155 (Bankr. M.D. Tenn. 1980). “T.C.A. § 47-2-326(3). 2 As pointed out by Official Comment No.”
North Georgia Toyota v. Jahn (In Re Tom Woods Used Cars, Inc.), 24 B.R. 529 (Bankr. E.D. Tenn. 1982). “See Tenn.Code Ann. § 47-2-326. The court concludes that there is no appropriate legal characterization of the facts that would give North Georgia Toyota a claim to the car superior to the rights of the trustee as a judgment creditor.”
Sino-Am. Econ. Dev. Corp. v. Plad, Inc. (In re Plad, Inc.), 22 B.R. 613 (Bankr. M.D. Tenn. 1982). “” Tenn.Code Ann. § 47-2-326 1979). The provisions of § 47-2-326 encompass any commercial transaction in which delivered goods may be returned to the seller by the buyer.”
United States Fid. & Guar. Co. v. Thompson & Green Mach. Co., 568 S.W.2d 821 (Tenn. 1978). “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 (§ 47-2-326). Whether a lease is intended as security is to be determined by the…”
Transouth Fin. Corp. v. Gen. Elec. Capital Corp., 832 S.W.2d 568 (Tenn. Ct. App. 1992). “§ 47-9-306(5) applies only to security interests and because Transouth is the owner of the chattel, it could protect its interest only under the consignment statute, T.C.A. § 47-2-326. The consignment statute, T.”
Robbins v. Comerica Bank-Detroit (In Re Zwagerman), 115 B.R. 540 (Bankr. W.D. Mich. 1990). “and I find no material differences between Tenn.Code Ann. § 47-2-326 (1989) and Mich.”
State of Tennessee v. Benjamin Brown (Tenn. 2010). “Tenn. Code Ann. § 47-2-326 (1996 & 2000 Supp.”
Alsafi Oriental Rugs v. Am. Loan Co., 864 S.W.2d 41 (Tenn. Ct. App. 1993). “Lastly, we note in passing that plaintiff also failed to protect his rights by filing a UCC-1, which enables him to protect his interest in consigned goods under T.C.A. § 47-2-326. Accordingly, the judgment of the trial court is reversed.”
Lancaster v. Hoye (In Re Kingsport Hardware, Inc.), 40 B.R. 838 (Bankr. E.D. Tenn. 1984). “Tenn.Code Ann. § 47-2-326(1) (1979), in pertinent part, states that if delivered goods may be returned by the buyer, the transaction is a “sale or return” if the goods are delivered primarily for resale.”
Knight v. United States, 838 F. Supp. 1243 (M.D. Tenn. 1993). “As noted in Tenn. Code Ann. § 47-2-326 (l)-(3) (1992): (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…”
— Tenn. Code Ann. § 47-2-326(1) — 1 case
Lancaster v. Hoye (In Re Kingsport Hardware, Inc.), 40 B.R. 838 (Bankr. E.D. Tenn. 1984). “Tenn.Code Ann. § 47-2-326(1) (1979), in pertinent part, states that if delivered goods may be returned by the buyer, the transaction is a “sale or return” if the goods are delivered primarily for resale.”
— Tenn. Code Ann. § 47-2-326(2) — 1 case
Transouth Fin. Corp. v. Gen. Elec. Capital Corp., 832 S.W.2d 568 (Tenn. Ct. App. 1992). “§ 47-9-306(5) applies only to security interests and because Transouth is the owner of the chattel, it could protect its interest only under the consignment statute, T.C.A. § 47-2-326. The consignment statute, T.”
— Tenn. Code Ann. § 47-2-326(3) — 4 cases
Edmondson v. Caldwell (In Re Phippens), 4 B.R. 155 (Bankr. M.D. Tenn. 1980). “T.C.A. § 47-2-326(3). 2 As pointed out by Official Comment No.”
In Re Music City RV, LLC, 304 S.W.3d 806 (Tenn. 2010). “Tenn.Code Ann. § 47-2-326 (1996 & 2000 Supp.”
Lancaster v. Hoye (In Re Kingsport Hardware, Inc.), 40 B.R. 838 (Bankr. E.D. Tenn. 1984). “Tenn.Code Ann. § 47-2-326(1) (1979), in pertinent part, states that if delivered goods may be returned by the buyer, the transaction is a “sale or return” if the goods are delivered primarily for resale.”
State of Tennessee v. Benjamin Brown (Tenn. 2010). “Tenn. Code Ann. § 47-2-326 (1996 & 2000 Supp.”
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