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84-2-505. Seller's shipment under reservation. (1) Where the seller has identified goods to the contract by or before shipment:

(a) The seller's procurement of a negotiable bill of lading to the seller's own order or otherwise reserves in the seller a security interest in the goods. The seller's 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 the seller or the seller's nominee reserves possession of the goods as security but except in a case of conditional delivery (subsection (2) of K.S.A. 84-2-507, and amendments thereto) 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 the preceding section 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.

History: L. 1965, ch. 564, § 70; L. 2007, ch. 90, § 54; July 1, 2008.


This section states a means by which a seller may reserve a security interest in goods shipped. See also 84-2-401(1) (reservation of title as reserving a security interest). A security interest created under this section does not affect title. For the treatment in Article 9 of security interests that arise under Article 2, see 84-9-113.

Law Review and Bar Journal References:

"Commercial Transactions Under the New Bankruptcy Act," Paul B. Rasor, 48 J.B.A.K. 199, 205 (1979).

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