Business Laws and Management · Elements of Law relating to Sale of Goods

Transfer of Property and Appropriation of Goods

Updated 11 October 2026 · Fact-checked

Property in goods means ownership. For specific goods, it passes when the parties intend (Section 19). For unascertained goods, it passes only after the goods are ascertained and unconditionally appropriated to the contract (Sections 18 and 23). Goods on approval pass under Section 24. Risk generally follows property (Section 26).

Understand Transfer of Property and Appropriation of Goods

Property in goods means ownership. It is different from possession. A buyer can have the goods without owning them, and can own them without having them. The Sale of Goods Act, 1930 decides who bears loss, who can sue third parties, and what happens on the seller's insolvency based on who holds the property.

Start with the basic split. Specific goods are identified and agreed upon at the time of the contract, such as one particular car. Unascertained goods are only described, such as 50 bags of rice from a godown stock. Under Section 18, no property passes in unascertained goods until they are ascertained.

For specific goods, the main rule is intention (Section 19). Property passes when the parties intend it to pass. To find intention, look at the contract terms, the conduct of the parties and the circumstances. Unless a different intention appears, Sections 20 to 24 are the rules for finding that intention. Section 20 says that in an unconditional contract for specific goods in a deliverable state, property passes when the contract is made, even if payment or delivery is postponed. Sections 21 and 22 delay the passing: if the seller must do something to put the goods in a deliverable state, or weigh, measure or test them to find the price, property does not pass until it is done and the buyer has notice.

For unascertained goods, appropriation is the key. Under Section 23(1), property passes when goods of the contract description, in a deliverable state, are unconditionally appropriated to the contract. This can be done by the seller with the buyer's assent, or by the buyer with the seller's assent. The assent may be express or implied, and may be given before or after the appropriation. Under Section 23(2), if the seller delivers the goods to the buyer or to a carrier for transmission to the buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated them.

Section 24 covers goods sent on approval or on sale or return. Property passes to the buyer when he signifies approval or acceptance, or does any other act adopting the transaction. It also passes if he keeps the goods without giving notice of rejection, once the fixed time ends, or a reasonable time if none was fixed. Finally, under Section 26, unless otherwise agreed, risk follows property.

Key formulas to remember

Unascertained goods (Section 18): Unascertained goods → no property passes until the goods are ascertained; First test for any question on goods described only by type or quantity.
Specific goods: intention (Section 19): Property passes when the parties intend; look at contract terms, conduct and circumstances; Sections 20 to 24 apply as rules of intention unless a different intention appears.
Unconditional contract, deliverable state (Section 20): Specific goods + unconditional + deliverable state → property passes when the contract is made; Postponed payment or delivery does not matter.
Seller must act on goods (Sections 21 and 22): Seller must put goods in deliverable state, or weigh/measure/test to fix price → property passes only after it is done and buyer has notice; Both conditions needed: act done and notice to buyer.
Appropriation (Section 23(1)): Unascertained/future goods by description + deliverable state + unconditional appropriation + assent → property passes; Assent can be express or implied, before or after appropriation.
Delivery to carrier (Section 23(2)): Delivery to buyer or carrier for transmission + no reservation of right of disposal → deemed unconditional appropriation; Carrier may be named by the buyer or not.
Right of disposal (Section 25): Seller reserves right of disposal → property does not pass until conditions are fulfilled, even after delivery to carrier; If goods are deliverable to the seller's order under a bill of lading or railway receipt, the seller is prima facie deemed to reserve it.
On approval or sale or return (Section 24): Property passes on (a) approval, acceptance or adopting act, or (b) retention without notice of rejection beyond the fixed time or a reasonable time; Use a reasonable time only if no time was fixed.
Risk (Section 26): Risk follows property, unless otherwise agreed; If delivery is delayed by one party's fault, that party bears loss that would not have occurred but for the fault.

How to solve Transfer of Property and Appropriation of Goods questions

Use this order for any MCQ or written problem on passing of property. It works because each step removes one wrong option.

1Classify the goods: specific or ascertained, or unascertained or future.
2If unascertained, say that no property passes until ascertained (Section 18), then check for appropriation under Section 23.
3If specific, ask if the contract is unconditional and the goods are in a deliverable state. If yes, property passes at the contract (Section 20), whatever the payment or delivery date.
4Look for delays: must the seller do something to make the goods deliverable, or weigh, measure or test for price? If so, property waits until it is done and the buyer has notice (Sections 21 and 22).
5Check for special terms: goods on approval or sale or return (Section 24), or the seller reserving the right of disposal (Section 25).
6Look for contrary intention in the facts. Under Section 19, an express agreement overrides the default rules.
7Once you know who owns the goods at the time of loss, apply Section 26: risk follows property unless otherwise agreed, with the fault proviso.
8Write the answer: state the rule, apply it to the facts, then give the conclusion.

Quickest way: Three-question shortcut for MCQs

When to use it: Use in the OMR paper when you have about a minute per question.

Ask: are the goods specific or unascertained? Unascertained means look for appropriation.
Ask: is there anything left to do, such as weighing, repairing, approving or fulfilling a condition? If yes, property has probably not passed yet.
Ask: who owns the goods at the time of loss? That party bears the risk, unless the facts say otherwise or one party delayed delivery through fault.
Eliminate options that pass property on payment or delivery alone. Those are not the tests in the Act.

Common mistakes in Transfer of Property and Appropriation of Goods

Thinking property passes when the price is paid or when goods are delivered.
Everyday life links ownership with paying and receiving.
Fix: The Act uses intention, and for unascertained goods, appropriation. Under Section 20, property can pass even if payment and delivery are postponed.
Saying property passes in unascertained goods at the time of contract.
Students apply the specific goods rule to all goods.
Fix: Section 18 says no property passes until the goods are ascertained. Then check Section 23.
Treating any selection of goods as appropriation.
The word 'unconditionally' and the need for assent are missed.
Fix: Appropriation must be unconditional, of goods in a deliverable state and of the contract description, with the other party's assent (express or implied).
Passing property under Section 24 only when the buyer says yes.
Students ignore the second limb of the section.
Fix: Property also passes if the buyer keeps the goods without giving notice of rejection after the fixed time, or a reasonable time if none was fixed.
Ignoring the seller's right of disposal after delivery to a carrier.
Section 23(2) is remembered but Section 25 is not.
Fix: Delivery to a carrier counts as appropriation only if the seller does not reserve the right of disposal. If reserved, property waits for the conditions.
Assuming risk always stays with the owner.
The words 'unless otherwise agreed' and the provisos are skipped.
Fix: Risk follows property by default, but parties can agree differently, and the party at fault for delayed delivery bears loss that would not otherwise have occurred.

Worked examples

Example 1

Ravi agrees to buy 100 bags of wheat from Sharma Traders' godown, which holds 500 bags. Nothing has been set apart for Ravi. A fire destroys the godown stock. Who bears the loss, and has property passed to Ravi?

Show the solution

The goods are 100 bags out of a larger stock, so they are unascertained.
Under Section 18, no property passes until the goods are ascertained.
No bags were set apart or appropriated to the contract, so Section 23 is not satisfied.
Property has not passed to Ravi.
Under Section 26, unless otherwise agreed, goods remain at the seller's risk until property passes.

Answer: Property has not passed to Ravi. The loss falls on Sharma Traders, unless the parties agreed otherwise.

Example 2

Meera, a Pune retailer, orders 20 sarees by description from a Surat mill. The mill packs 20 matching sarees in a deliverable state and hands them to a transporter for Meera, without reserving the right of disposal. The goods are lost in transit. Has property passed to Meera?

Show the solution

The sarees were ordered by description, so they were unascertained when the contract was made.
The mill packed goods of that description in a deliverable state for this contract.
Delivery to a carrier for transmission to the buyer, without reserving the right of disposal, is deemed unconditional appropriation under Section 23(2).
Therefore property passed to Meera when the mill delivered to the transporter.
Under Section 26, risk follows property, so the loss in transit is Meera's, unless otherwise agreed.

Answer: Yes. Property passed to Meera on delivery to the carrier, so the transit loss is at her risk unless otherwise agreed.

Exam tips

In an MCQ, first decide specific or unascertained. Most options fall away after that.
Link Section 23 with the words 'unconditionally appropriated', 'deliverable state' and 'assent'. Examiners build options around these words.
For Section 24, check whether a time was fixed. The retention limb depends on it.
Look for facts showing a contrary intention. If the facts state when ownership is to pass, that overrides the default rules.
There is no negative marking in Paper 4, so attempt every question. Use the 15 minutes of reading time to mark the passing-of-property questions.

Practice questions from Elements of Law relating to Sale of Goods

Transfer of Property and Appropriation of Goods in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Transfer of Property and Appropriation of Goods: frequently asked questions

What is appropriation of goods under Section 23?

It means setting aside goods of the contract description, in a deliverable state, for a particular contract. When this is done unconditionally with the other party's assent, property passes to the buyer. Delivery to a carrier without reserving the right of disposal is deemed appropriation.

When does property pass in goods sent on approval?

Under Section 24, property passes when the buyer signifies approval or acceptance, or does any other act adopting the transaction. It also passes if he retains the goods without notice of rejection after the fixed time, or after a reasonable time if none was fixed.

Does property pass only when the price is paid?

No. For specific goods in a deliverable state under an unconditional contract, property passes when the contract is made. This is so even if payment or delivery is postponed. Parties can, however, agree on a different time.

Who bears the risk of loss of goods?

Unless otherwise agreed, risk follows property under Section 26. Goods stay at the seller's risk until property passes, and then at the buyer's risk, whether or not delivery is made. If delivery is delayed by one party's fault, that party bears loss that would not have occurred but for the fault.