Business Laws · The Sale of Goods Act, 1930

Transfer of Property and Title under the Sale of Goods Act, 1930

Updated 4 October 2026 · Fact-checked

Property in goods passes to the buyer when the parties intend it to pass (Section 19). If intention is unclear, Sections 20 to 24 give rules. Risk goes with property (Section 26). A non-owner generally cannot give better title (Section 27), except in exceptions like mercantile agents, joint owners and possession after sale.

Understand Transfer of Property and Title

Property means ownership of the goods. Possession means physical control. They are different. A buyer can own goods the seller still holds, and a person can hold goods that someone else owns. Exam questions turn on this difference.

The Act has a basic rule: for specific or ascertained goods, property passes when the parties intend it to pass (Section 19(1)). To find the intention, look at the terms of the contract, the conduct of the parties and the circumstances of the case (Section 19(2)). Sections 20 to 24 are rules for finding intention, and they apply unless a different intention appears (Section 19(3)).

Why does the moment matter? Because risk prima facie passes with property (Section 26). Unless otherwise agreed, goods stay at the seller's risk until property passes. After that they are at the buyer's risk, even if delivery has not happened. There is a proviso: if delivery is delayed through the fault of either party, that party bears any loss which would not have occurred but for the fault.

The second half of the topic is title. The general rule is nemo dat quod non habet: no one can give what he does not have. Under Section 27, a buyer from a non-owner gets no better title than the seller had. But the law protects honest buyers in some situations. These are the exceptions, and they are heavily tested.

So the topic has two questions to answer in every problem: who owns the goods now, and if a wrong person sold them, does the buyer still get a good title?

Key rules to remember

Intention rule: Property passes when the parties intend it to pass (Section 19); Check terms, conduct and circumstances. Sections 20 to 24 apply unless a different intention appears.
Specific goods, deliverable state, unconditional contract: Property passes when the contract is made (Section 20); Postponing payment or delivery, or both, does not matter.
Seller must put goods in deliverable state: Property does not pass until the thing is done AND the buyer has notice (Section 21); Both conditions are needed.
Seller must weigh, measure or test to find price: Property does not pass until the act is done AND the buyer has notice (Section 22); Applies to specific goods already in a deliverable state.
Goods on approval or sale or return: Property passes on (a) approval or an act adopting the transaction, or (b) retention without notice of rejection after the fixed time, or a reasonable time if none is fixed (Section 24); Silence plus retention can transfer property.
Risk: Risk follows property unless otherwise agreed (Section 26); Fault in delaying delivery shifts the loss to the party at fault.
Nemo dat: Buyer from a non-owner gets no better title than the seller had (Section 27); Unless the owner is precluded by conduct from denying the seller's authority, or an exception applies.
Exception: mercantile agent: Valid if agent has owner's consent to possession, acts in ordinary course of business, and buyer is in good faith without notice (Section 27 proviso); All conditions must be met.
Exception: joint owner: Buyer gets title if the joint owner has sole possession by permission of co-owners and buyer is in good faith without notice (Section 28); Possession must be with the co-owners' permission.
Exception: seller in possession after sale: Further sale or disposition to a good-faith buyer without notice of the earlier sale is as if authorised by the owner (Section 30(1)); Seller must continue in possession of goods or documents of title.
Exception: buyer in possession: Buyer who obtained possession with the seller's consent can pass good title to a good-faith transferee without notice of the seller's lien or right (Section 30(2)); Seller's consent to possession is essential.

How to solve Transfer of Property and Title questions

Use this order for any problem. Write the provision, apply the facts, then give a conclusion.

1Classify the goods: specific, ascertained or unascertained. Property cannot pass in unascertained goods until they are ascertained.
2Look for an expressed intention in the facts: terms, conduct, circumstances (Section 19). If it is clear, it decides the matter.
3If intention is not clear, pick the matching rule: Section 20 (unconditional, specific, deliverable), Section 21 (seller must do something), Section 22 (seller must weigh or test), or Section 24 (approval or sale or return).
4Fix the date property passed, then apply Section 26 to decide who bears the loss. Check for delay caused by someone's fault.
5If the seller was not the owner, state the nemo dat rule (Section 27) and test each exception against the facts.
6For each exception, check every condition: consent of the owner, good faith, no notice, ordinary course of business, possession.
7Write a clear conclusion: who owns the goods and who bears the loss or has the better title.

Quickest way: Four-question scan

When to use it: Use when you have limited time on a short-answer or case-based law question.

Ask: are the goods specific and in a deliverable state? Is the contract unconditional? If yes, cite Section 20 and say property passed at the contract.
Ask: does the seller still have to do something (make deliverable, weigh, test)? If yes, cite Section 21 or 22 and check the buyer's notice.
Ask: are the goods on approval? Cite Section 24 and check for approval, adoption or retention beyond the time.
Ask: was the seller the owner? If not, name nemo dat and match the facts to one exception in one line each.
Finish with risk: whoever owns bears the loss unless fault in delay or a contrary agreement.

Common mistakes in Transfer of Property and Title

Treating possession as ownership.
In daily life, the person holding goods looks like the owner.
Fix: Always ask who has property and who has possession. Only the exceptions allow a non-owner in possession to pass title.
Saying property does not pass under Section 20 because payment or delivery is postponed.
Students link ownership to payment.
Fix: Section 20 says postponement of payment, delivery or both is immaterial. Property passes when the contract is made.
Forgetting the buyer's notice under Sections 21 and 22.
Students remember that the seller must act but skip the second condition.
Fix: Write both conditions: the act is done AND the buyer has notice.
Applying the Section 27 mercantile agent exception without checking all conditions.
The word agent triggers an automatic answer.
Fix: Check owner's consent to possession, ordinary course of business, good faith and no notice. If any fails, the exception fails.
Saying the buyer always bears the risk once he has the contract.
Students ignore the link between risk and property.
Fix: Risk passes with property, not with the contract as such. If property has not passed, the seller bears the risk, subject to agreement and the fault proviso.
Missing the sale or return rule that silence can pass property.
Students expect an express acceptance.
Fix: Under Section 24(b), retaining the goods without giving notice of rejection past the fixed or reasonable time passes property.

Worked examples

Example 1

On 1 March, Ravi agrees to buy a specific second-hand car from Sunil for ₹4,50,000. The contract is unconditional and the car is ready for delivery. Payment and delivery are fixed for 15 March. On 10 March the car is destroyed in a fire in Sunil's garage, without anyone's fault. Who bears the loss?

Show the solution

The car is specific goods in a deliverable state, and the contract is unconditional.
Under Section 20, property passes to the buyer when the contract is made. Postponing payment and delivery is immaterial.
So property passed to Ravi on 1 March.
Under Section 26, once property passes, the goods are at the buyer's risk whether delivery has been made or not. No contrary agreement or fault in delay is stated.
Section 8 does not help Ravi, because it applies only where the goods perish before the risk passes to the buyer. Here the risk had already passed.

Answer: Ravi bears the loss. Property and risk passed to him on 1 March, so he must still pay the price of ₹4,50,000.

Example 2

Part A: Meena, a jeweller, delivers a necklace to Raj on approval on 1 April. She does not fix a time for return. Raj says nothing and keeps it. On 20 April, a thief steals it from Raj's house without any fault of Raj or Meena. Part B (separate facts): Meena, with her consent, leaves a ring in the possession of Kiran, a mercantile agent, for sale. Kiran sells the ring in the ordinary course of business to Tina, who buys in good faith and has no notice that Kiran lacks authority to sell. Discuss the position of the necklace and the ring.

Show the solution

Part A, necklace: goods were delivered on approval. Under Section 24(b), if the buyer does not signify approval but retains the goods without giving notice of rejection, property passes on the expiry of a reasonable time where no time is fixed.
Raj kept the necklace for 19 days with no rejection. This is likely a reasonable time to have passed, though it depends on the facts and the nature of the goods.
If a reasonable time has elapsed, property passed to Raj, and under Section 26 the necklace is at his risk, so he must bear the loss and pay.
If a reasonable time had not elapsed, property remained with Meena and she bears the loss.
Part B, ring: Kiran is not the owner. The proviso to Section 27 protects the buyer if the mercantile agent was in possession with the owner's consent, sold in the ordinary course of business of a mercantile agent, and the buyer acted in good faith without notice of lack of authority.
On the stated facts, Kiran is a mercantile agent, was in possession of the ring with Meena's consent, and sold in the ordinary course of business. Tina acted in good faith without notice. All conditions are met.

Answer: Necklace: Raj most likely owns it by retention and bears the theft loss, provided a reasonable time has elapsed. Ring: Tina gets a good title under the mercantile agent proviso to Section 27, because every condition is met on the stated facts.

Exam tips

Write the section number and its rule in one line before applying facts. Examiners give marks for the provision.
In case studies, underline words like specific, unconditional, deliverable, approval, good faith and notice. They point to the rule.
For nemo dat questions, list the general rule first, then the exception that fits. Do not list all exceptions if only one applies.
Always end with the risk position or the title position. Many students apply the law but forget to conclude.
Do not cite a section number unless you are sure. Name the rule in plain words if unsure.

Practice questions from The Sale of Goods Act, 1930

Transfer of Property and Title: frequently asked questions

What is the difference between property and possession in the Sale of Goods Act?

Property means ownership. Possession means physical control of the goods. A seller can keep possession after property has passed to the buyer, and a buyer can hold goods before he owns them.

Which sections cover when property passes in specific goods?

Section 19 states the main rule that property passes when the parties intend. Sections 20 to 24 give rules to find that intention, and they apply unless a different intention appears.

What is the nemo dat rule?

Nemo dat quod non habet means no one gives what he does not have. Under Section 27, a buyer from a non-owner gets no better title than the seller had. The Act then lists exceptions that protect honest buyers.

Who bears the risk if goods are destroyed before delivery?

Unless otherwise agreed, risk follows property under Section 26. If property has passed, the buyer bears the loss even without delivery. If delivery was delayed by someone's fault, that party bears the loss which would not have occurred but for the fault.