402.326 Sale on approval and sale or return; rights of creditors.

(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.

(4) Any “or return" term of a contract for sale is to be treated as a separate contract for sale within s. 402.201 and as contradicting the sale aspect of the contract within s. 402.202 on parol or extrinsic evidence.

(5) If a person delivers or consigns for sale goods that the person used, or bought for use, for personal, family or household purposes, these goods do not become the property of the deliveree or consignee unless the deliveree or consignee purchases and fully pays for the goods. This subsection does not prevent the deliveree or consignee from acting as the deliverer's or consignor's agent to transfer title to these goods to a buyer who pays the full purchase price. Any payment received by the deliveree or consignee from a buyer of these goods, less any amount that the deliverer or consignor expressly agreed could be deducted from the payment for commissions, fees or expenses, is the property of the deliveror or consignor and is not subject to the claims of the deliveree's or consignee's creditors.

History: 1991 a. 316; 1997 a. 279; 2001 a. 10.

Factors relevant to determining whether goods are delivered “for sale" are enumerated and discussed. Armor All Products v. Amoco Oil Co. 194 Wis. 2d 35, 533 N.W.2d 720 (1995).

Whether a transaction is a “sale on approval" must be determined by an objective examination of the transaction documents and the parties' performance, rather than examination of the parties' subjective intent. Houghton Wood Products v. Badger Wood Products, 196 Wis. 2d 457, 538 N.W.2d 621 (Ct. App. 1995), 95-0004.

When a good is used in the manufacturing process where it undergoes transformation and is subsequently resold, it is not delivered for “use" under sub. (1). Houghton Wood Products v. Badger Wood Products, 196 Wis. 2d 457, 538 N.W.2d 621 (Ct. App. 1995), 95-0004.