Transfer of Ownership for Goods Sent on Approval or Return

A saree merchant sends bridal wear on approval to a boutique. A jeweller hands over gold ornaments so a customer can show them to family before deciding. A publisher stocks books at a shop on the understanding that unsold copies can be returned. In each of these situations, goods change hands long before anyone has actually agreed to buy or sell anything. So when does ownership legally pass from the seller to the buyer? Section 24 of the Sale of Goods Act, 1930 answers exactly this question, and it is one of the more practical rules a commerce student will ever study.

What “on approval” or “sale or return” really means 🔗

In an ordinary sale, ownership usually passes the moment the contract is made or the goods are identified and made ready for delivery. Goods sent “on approval” work differently. Here, the seller delivers the goods to the buyer without there being a firm sale yet. The buyer gets time to inspect, test, or even use the goods before deciding whether to keep them or send them back.

This arrangement is common wherever a buyer needs to be reasonably certain before paying: high-value items like jewellery, goods bought for resale such as books or garments, or products a buyer wants to try out first. The seller takes on some risk by parting with possession before payment, but it is a practical way to close deals that would otherwise stall on trust.

The legal rule: Section 24 explained 🔗

Section 24 lays down that when goods are delivered on approval, on sale or return, or on similar terms, ownership passes to the buyer in one of three situations. Understanding these three triggers is the heart of this topic.

1. The buyer signifies acceptance 🔗

If the buyer tells the seller, in words or in writing, that the goods are accepted, ownership transfers immediately. This is the most straightforward trigger and needs no further explanation.

2. The buyer does an act that “adopts” the transaction 🔗

Ownership also passes when the buyer does something with the goods that only an owner would reasonably do, even without saying “I accept.” Reselling the goods, pledging them, or otherwise dealing with them as one’s own counts as adopting the transaction. A frequently cited illustration is Kirkham v Attenborough, where a jeweller delivered jewellery to a dealer on a sale-or-return basis. The dealer pledged it with a third party instead of returning or paying for it. Courts held that pledging the goods was an act inconsistent with the seller still being the owner, so ownership had already passed to the dealer by the time of the pledge. The original jeweller therefore could not recover the goods from the third party.

3. The buyer retains the goods beyond the fixed or a reasonable time 🔗

If the buyer neither accepts explicitly nor rejects the goods but simply holds on to them, ownership still passes once time runs out. If the seller and buyer had agreed on a specific return period, ownership transfers the moment that period expires. If no time was fixed, the law looks at what a reasonable time would be, based on the nature of the goods, trade custom, and the circumstances of the case. Silence combined with continued possession is treated as good as acceptance once that window closes.

Why the law is designed this way 🔗

The underlying logic is fairness to both sides. A buyer should not be forced to commit to a purchase before having a genuine chance to evaluate the goods, and a seller should not be left indefinitely uncertain about whether a sale has actually happened. Legal commentary on the Act notes that the passing of property is what ultimately fixes the rights, duties, and liabilities of both parties, since ownership and risk usually travel together. Section 24 essentially closes the gap between “goods delivered” and “sale completed,” giving both parties a clear, predictable point at which ownership shifts.

How the three triggers compare 🔗

Ownership and risk travel together 🔗

Once ownership passes under any of these three triggers, risk usually passes along with it, since the general rule under the Act ties risk of loss or damage to who owns the goods at the relevant time. This matters practically. If goods sent on approval are accidentally damaged before the buyer has accepted them, rejected them, or let the time limit lapse, the loss generally falls on the seller, since ownership had not yet transferred. Once one of the three triggers is satisfied, that risk shifts to the buyer, whether or not the goods are still physically with the seller.

Where this shows up in everyday Indian trade 🔗

Jewellery and gold ornaments 🔗

Jewellers routinely hand over ornaments so a customer can consult family members or get a second opinion. Until the customer accepts, uses the item in a way that shows adoption, or holds it past the agreed period, the jeweller technically remains the owner.

Books, textiles, and consignment-style trade 🔗

Publishers and textile wholesalers often place stock with retailers who pay only for what sells, returning the rest. This is a classic sale-or-return structure, and Section 24 determines exactly when the retailer becomes the owner of any given unit of stock.

Modern online shopping 🔗

The same underlying idea shows up in how e-commerce returns work today, even though the legal framework has expanded. Under the Consumer Protection (E-Commerce) Rules, 2020, platforms must clearly disclose return and refund windows to buyers. A product bought online and kept past its return window, without the buyer raising any issue, mirrors the “retention beyond a fixed time” trigger under Section 24, even though the e-commerce rules add their own layer of consumer protection on top of the core Sale of Goods principle.

Points students often get wrong 🔗

A few recurring confusions are worth flagging directly.

• Delivery is not sale: Physical possession of goods on approval does not by itself mean ownership has passed. All three triggers require something more than mere delivery.
• Silence is not automatically rejection: A buyer who simply does nothing is not treated as having rejected the goods. Once the time limit runs out, silence works against the buyer.
• An inconsistent act is enough, even without words: Reselling or pledging goods transfers ownership to the buyer even if the buyer never said “I accept.”
• Reasonable time is a question of fact: There is no fixed number of days written into the law when no time limit was agreed upon. Courts look at the nature of the goods and the trade practice involved.

A quick worked example 🔗

A textile wholesaler delivers 50 sarees to a boutique “on approval,” with no return date fixed. The boutique sells 30 of them over three weeks and keeps the rest on display. For the 30 sold sarees, ownership passed to the boutique the moment it resold them, since resale is an act adopting the transaction. For the remaining 20, ownership will pass once a reasonable time has lapsed without the boutique returning them or notifying the wholesaler of rejection. What counts as reasonable here would depend on how boutiques and wholesalers typically operate in that line of trade.

What do you think? If a buyer keeps goods sent on approval for far longer than usual but insists they never actually accepted them, should retention alone be enough to fix ownership on them? And in fast-moving trades like fashion retail, where returns can happen in days, what should count as a “reasonable time” when no date has been fixed?

References

1. https://www.indiacode.nic.in/show-data?actid=AC_CEN_3_20_00059_193003_1523350185738&orderno=24&sectionId=30115&sectionno=24
2. https://blog.ipleaders.in/passing-of-property-under-soga-1930/
3. https://ijlsi.com/article/view/circumstances-when-property-gets-transferred-to-buyer-under-sale-of-goods-act-1930
4. https://law.uok.edu.in/Files/5ce6c765-c013-446c-b6ac-b9de496f8751/Custom/passing_of_property.pdf
5. https://consumeraffairs.nic.in/theconsumerprotection/consumer-protection-e-commerce-rules-2020