INTRODUCTION

The sole purpose of a sale is the transfer of ownership of goods from the seller to the buyer. It is
important to know the precise moment of time at which the property in the goods passes from the
seller to the buyer for the following reasons:
(a) The general rule is that risk follows the ownership, whether the delivery has been made or not. If
the goods are lost or damaged by accident or otherwise, then, subject to certain exceptions, the loss
falls on the owner of the goods at the time they are lost or damaged.
(b) When there is a danger of the goods being damaged by the action of third parties it is generally
the owner who can take action.
(c) The rights of third parties may depend upon the passing of the property if the buyer resells the
goods to a third-party, the third-party will only obtain a good title if the

property in the goods has

passed to the buyer before or at the time of the resale. Similarly, if the seller, in breach of his
contract with the buyer, attempts to sell the goods to a third party in the goods, has not passed to
the buyer, e.g., where there is only an agreement to sell.
(d) In case of insolvency of either the seller or the buyer, it is necessary to know whether the goods
can be taken over by the official assignee or the official receiver. It will depend upon whether the
property in the goods was with the party adjudged insolvent.
Thus owing to the importance of the change in ownership to the rights and liabilities of the buyer
and seller to the goods and the remedies against each other, it becomes necessary that it becomes
absolutely certain that who has the ownership at relevant time. As per section 19 of the Sale of
Goods Act, the goods are passed to the upon the intention of the parties. Unless a different
intention appears the rules contained in section 20 to 24 are used to ascertain the intention of the
parties as to the time at which the property in the goods is to pass to the buyer.

Passing of property in specific goods

In a sale of specific or ascertained goods, the property passes to the buyer as and when the parties
intended to pass. The intention must be gathered from the terms of the contract, the conduct of the
parties, and the circumstances of the case.
Unless a contrary intention appears, the following rules are applicable for ascertaining the intention
of the parties:
(a) Where there is an unconditional contract for the sale of specific goods in a deliverable state,

the property passes to the buyer when the contract is made. Deliverable state means such a
state that the buyer would be bound to take delivery of the goods. The fact that the time of
delivery or the time of payment is postponed does not prevent the property from passing at
once. (Section 20)
(b) Where there is a contract for the sale of specific goods not in a deliverable state, i.e., the
seller has to do something to the goods to put them in a deliverable state, the property does
not pass until that thing is done and the buyer has notice of it. (Section 21)
(c) Where there is a sale of specific goods. in a deliverable state, but the seller is bound to weigh, measure, test or
do something with reference to the goods for the purpose of ascertaining the -price, the property to the
goods for the purpose of ascertaining the price, does not pass until that thing is done and the buyer has
notice of it. (Section 22)
The provisions relating to the passing of property on sale of unascertained goods are split in two sections.
18. Goods must be ascertained.Where there is a contract for the sale of unascertained goods, no property in the
goods is transferred to the buyer unless and until the goods are ascertained.

Section 23 : Sale of unascertained goods and appropriation.

1. Where there is a contract for the sale of unascertained or future goods by description and goods
of that description and in a deliverable state are unconditionally appropriated to the contract assent
of the buyer or by the buyer with the assent of the seller, the property in the goods there upon
passed to the buyer. Such assent may be expressed or implied, and may be given either before or
after the appropriation made.
2. Delivery to the carrier - Where in pursuance of the contract the seller delivers the goods to the
buyer or to the carrier or other bailee (whether named by the buyer or not) for the purpose of
transmission to the buyer, and does not reserve the right of disposal, he is deemed to have
unconditionally appropriated the goods to the contract.

In the present project, it is analyzed that how the goods are passed to the buyers in cases of unascetained goods and
what conditions are need to be fulfilled while it can be said that the goods have passed to the buyer from the seller.

ANALYSING THE CONCEPTS ENSHRINED IN SECTION 23

1.) Unascertained Goods:
Unascertained goods are not defined by the Sales of Goods Act but they fall into three main categories. The first
category is that of generic goods, that is to say, goods of general nature without any special indication, such as 20
hogsheads of sugar1. The second category is that of future goods which is defined in section 2(6) of the act which
means goods to be manufactured or produced or acquires by the seller after making of the contract of sale. The third
category is that of goods which are in a known bulk and only an unseparated part of the bulk is sold, such as 100
quarters if barley out of seller's bulk stock.2
2.) Deliverable State:
The goods should be in a deliverable state. As per section 2(3):
Goods are said to be in a deliverable state when they are in such state that the buyer would under the contract be
bound to take delivery of them.
A 'deliverable state' does not depend upon the mere completeness of the subject matter in all its parts, but on the actual
state of the goods at the date of the contract and the state in which they are to be delivered by the terms of the contract.
In Varley v Whipp3, where there was a contract for sale of a reaping machine and the machine delivered was older
than its stated age it was held that where the goods do not correspond with their description in the contract, they are not
in a deliverable state and even if they have been delivered to the buyer, he may reject them.
3.) Ascertainment and Appropriation:
Ascertainment is the process by which the identity of the goods to be delivered under the contract is established.
But a mere setting apart or selection by the seller of the goods which he expects to use in performance of the contract
is not enough. They must also be appropriated to the contract. The distinction between ascertainment and
appropriation is that ascertainment can be a unilateral act, that is the seller alone may set apart the goods. But
appropriation involves the element of common intention. To constitute an appropriation of the goods to the contract
the parties must have had, or be reasonably supposed to have had, an intention to attach the contract irrevocably to
those goods, so that those goods and no others are the subject of the sale and become the property of the buyer.
Appropriation is to be understood as an overt act manifesting an intent to identify specific goods as those to which
bargain of the parties shall apply.
For a appropriation to be successful following essentials need to be fulfilled:
1
2
3

Rhode v Thwaites, (1827) 6 B&C 388

Aldridge v Jhonson, (1857) 7 E&B 885
Varley v Whipp, [1990] 1 QB 513

a) The goods should confirm to the description and quality stated in the contract.
b) The goods must be in a deliverable state as defined in section 2(3) of the Sale of Goods Act, 1930.
c) The goods must be unconditionally appropriated to the contract either by delivery to buyer or his agent or the
carrier.
d) The appropriation must be : I) by seller with the assent of buyer
II) by buyer with the assent of seller
e) The assent may be expressed or implied.
f) The assent may be given either before or after the appropriation.
4.) Unconditionally
Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or custodier
(whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of
disposal, he is to be taken to have unconditionally appropriated the goods to the contract

5.) Section 18 to be taken into Consideration

Moreover to determine the ownership of the unascertained goods sec 18 has to be also taken into account. It state:
18. Goods must be ascertained.Where there is a contract for the sale of unascertained goods, no property in the
goods is transferred to the buyer unless and until the goods are ascertained.
Section 18 does not say that the property passed on the ascertainment of the goods passes on the ascertainment. It only
says that there is no question of passing of property unless and until the goods are ascertained. The effect of this section
is that the whatever be the intention of the parties, property cannot pass in unascertained goods. A equitable title cannot
pass under a simple contract of unascertained goods merely by virtue of sale, since the buyer cannot acquire title until
it was known to what goods the title relates. Thus ascertainment is must for passing of goods.
Section 23 says that property is passed when they are unconditionally apportioned. Thus,

Property in unascertained goods pass when there is Ascertainment + Appropriation

UNCONDITIONALLY APPROPRIATED
What constitutes unconditionally appropriated is not categorically defined by the act. Thus, owing to the its
importance various judicial interpretations have been given to ascertain that what constitutes unconditionally
appropriation. The basic elements to determine that the goods are unconditionally appropriated are:

1. Non reservation of Right of Disposal:

One of the essentials of appropriating the goods is that the goods shall be unconditionally appropriated to the contract.
Sec 23(2) of the Act provides one instance unconditional appropriation of goods. It shows clearly that the seller has not
reserved his right to dispose of the goods i.e. jus disponendi. However there is a conditional appropriation of the
goods where the seller will not part with the goods until he is paid. So also there is a conditional appropriation where
the seller ships the goods as per his contract but takes a bill of lading to his own order or to the order of his agent. Thus
it is the basic requirement of the appropriation that the seller has forfeited the right of disposing the goods. Once the
seller forfeits his right of disposal of the goods the goods are passed to the buyer as the goods are now are
unconditionally appropriated.
Section 25 of the Sale of Goods Act mention certain circumstances under which the seller reserves the rights of
disposal. Sec 25 states that:
25. Reservation of right of disposal.
(1) Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the
contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until
certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to a buyer, or to a carrier or
other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the
conditions imposed by the seller are fulfilled.
(2) Where goods are shipped or delivered to a railway administration for carriage by railway and by the bill of lading
or railway receipts, as the case may be, the goods are deliverable to the order of the seller or his agent, the seller is
prima facie deemed to reserve the right of disposal.
(3) Where the seller of goods draws on the buyer for the price and transmits to the buyer the bill of exchange together
with the bill of lading or, as the case may be, the railway receipt, to secure acceptance or payment of the bill of
exchange, the buyer is bound to return the bill of lading or the railway receipt if he does not honour the bill of
exchange; and, if he wrongfully retains the bill of lading or the railway receipt, the property in the goods does not pass
to him.
Thus if the seller retains the right of disposal as enshrined under sec 25 notwithstanding that the goods are delivered to
the buyer the property in the goods does not pass to the buyer. Thus, the good is not unconditionally appropriated if the
the seller keeps the right of disposal of the goods with him.

In Loeschman v Williams4, a piano was sold. It was to be delivered at the packer's premises and to be paid for in cash.
The seller left it at the packer's premises on the express condition that it was not to be delivered to the buyer until paid
for. The packer, however delivered it without the payment. It was held that the instrument was the seller's property and
the packer was liable in trover in wrongfully delivering it to the buyer. By making the delivery conditional upon the
payment the seller had reserved the right of disposal and that prevented the property form passing.
Thus where the delivery of the goods is made conditional then the right of disposal rests with the seller and thus the
goods are not unconditionally appropriated to the contract and hence the property does not pass to the buyer.
Section 25 has to be read with section 23.
It was held in Mirabita v. Imperial Ottoman Bank5 that in case of such a contract that is a contract for the sale of the
unascertained goods, the delivery by the vendor to a common carrier, or, unless the effect of the shipment is restricted
by the terms of bill of lading, shipment on board of a ship of, or chartered for, the purchaser, is an appropriation
sufficient to pass the property. [ This corresponds to sec 23]
If however the vendor when shipping the articles which he intends to deliver under the contract, takes the bill of lading
to his own order and does so not as a agent or on behalf of the buyer, but on his own behalf, it is held that he thereby
reserves to himself a power of disposing of the property and that consequently there is no final appropriation and
property does not on shipment pass to purchaser. [ This corresponds to sec 25(1) and 25(2)]
If the vendor deals with or claims to retain the bill of lading, in order to secure the contract price, as and when he sends
forward the bill of lading with a bill of exchange the appropriation is not absolute, but until the acceptance of the draft,
or payment or tender of the price, is conditional only, and until such acceptance or payment or tender, the property in
the goods does not pass to the purchaser.6 [ It is explanatory of the words unconditionally appropriated in sec
23(1)]
In Nippon case7, the respondents sold the goods to the buyers but the mate's receipt issued by the shipowners had the
name of the buyers as shippers of the goods. The Privy Council held that the insertion of the name of the buyer in
mate's receipt as shipper indicated that there was no reservation of right to disposal by the seller.
In Shankar Das v Bhana Ram8, sellers had contracted to sell oil and had received the price. Subsequently, they
received from their vendors a railway receipt for the goods and the sellers endorsed them to the buyer. It was held that
the property has passed to the buyer and the risk of destruction in transit lay with him.

2. Goods of Contract Quality:

For the goods to be unconditionally appropriated the goods should be also be of the contract quality. If the goods
delivered are not of the contract quality then the goods will not be considered to be unconditionally appropriated. In

4
5
6
7
8

Loeschman v Williams, (1815) 4 Camp 181

Mirabita v Imperial Ottoman Bank, (1878) 3 Ex. D. 164
The Prinz Adelbert (1917) A.C. 586
Nippon Ysuen Kaisha v Ramjibhan, (1938) 40 BOMLR 799
Shankar Das v Bhana Ram, AIR 1936 Lah 606

Vigers v. Sanderson9 there was a contract for two parcels of Swan laths of specified length, and it was provided that
property should pass on shipment, and that if any dispute arose, the buyer was not to reject the goods but the dispute
was to be referred to the arbitration. However, the goods supplied by the seller were not of the contract description. It
was held that no question of passing of property arose. The buyer could reject the goods in spite of the clause
stipulating that he shall not reject the goods as the seller has to deliver the goods what he has contracted to deliver.
Thus, if the goods delivered do not correspond to the description and quality stated in the contract then the goods are
not passed to the buyer.

3. Goods appropriation shall be last act of seller

Further the goods ought to be apportioned unconditionally it should be the last act of the seller. When the goods are
dealt with, by the last act of the seller such that they are beyond the powers of the seller, then the goods are termed as
unconditionally appropriated. In Carlos Federspiel & Co, S.A. v. Charles Twigg & Co Ltd10, the seller had to desoatch
cycles and tricylces f.o.b. UK Port. They had the goods packed and marked with port of destination. But before they
were shipped the sellers went into liquidation. The buyers claimed the goods from the liquidator on the ground that the
goods, having been unconditionally appropriated became their property. But the court held that the parties' intention
was that property should pass on shipment and the mere preparation for shipment did not amount to an unconditional
appropriation. As there was an act still to be performed by the seller.

4. Goods should be in a Deliverable State:

Goods are said to be in a deliverable state when they are in such state that the buyer would under the contract be
bound to take delivery of them. If the seller has to paint a car to make it acceptable to the buyer, it is not in a deliverable
state until it is so painted. Even where the article sold is complete in itself and nothing remains to be done to it, it may
not be regarded to be in a deliverable state if the seller has to dismantle forwarding it. This is shown by Underwood
Ltd v Burgh Castle Brick & Cement Syndicate11. The facts were: The subject matter of the sale was a horizontal
condensing machine. The sellers agreed to sell it f.o.r. London. The engine weighed 30 tons. It was bolted to a
concrete emplacement in which it had become embedded by its own weight, so that it had first to be unfastened and
then to be dismantled. The engine was damaged on its way to the rails. The sellers contended that where where there
was nothing to be done to make it an engine or cart it is in the deliverable state. The court did not accept it. It held that a
deliverable state does not depend upon he mere completeness of the subject matter in all its parts, but on the actual
state of the goods at the date of the contract and the state in which they are to be delivered by the terms of the contract.
Thus when the unascertained goods are apportioned in the deliverable state then only it is considered to be
unconditionally appropriated to the contract and then only the ownership passes to the buyer.
9

Vigers v Sanderson, (1901) 1 KB 608

10 Carlos Federspiel & Co, S.A. v. Charles Twigg & Co Ltd, [1957] 1 Lloyd's Rep 240
11

Underwood Ltd v Burgh Castle Brick & Cement Syndicate, [1922] 1 KB 343

Example of appropriation as per sec 23(2):

Sec 23(2) states:
Delivery to the carrier - Where in pursuance of the contract the seller delivers the goods to the buyer or to the carrier
or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve
the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.
The moment the goods which have been selected in pursuance to the contract are delivered to the carrier, the carrier
becomes the agent of the vendee and such a delivery amounts to a delivery to the vendee and if there is a binding
contract between the vendor and the vendee then there is no doubt that the property passes by such delivery to the
carrier. It is necessary that the goods should agree with the contract. It is also necessary that delivery to carrier must
show to which particular buyer the goods are appropriated for otherwise the otherwise the property does not pass. In
Marwar Tent Factory v Union of India12, in case for supply of goods i.e. tents, the property passed as soon as the
goods were delivered to the railways and buyer became bound to pay the price of the whole load in spite of the fact
that the railways delivered 224 items less than that those dispatched. This because the seller had not reserved the right
to dispose, the goods were of the contract quality and in the deliverable state and also the seller has performed its last
act of delivery by giving it to the railways. Thus the goods ownership was transferred to the buyer as the goods were
unconditionally appropriated, so the risks were also to the buyer.
Thus, section 23(2) explains one of the ways in which it can be made out that the goods are unconditionally
apportioned and thus the goods ownership is transferred from the seller to the buyer.

12 Marwar Tent Factory v Union of India, (1990) 1 SCC 71

CONCLUSION
As per sec 26 of the Act, the Risk prima facie passes with property. Thus goods remain at the seller's risk until the
property therein is transferred to the buyer, but the when the property therein is transferred to the buyer, the goods are
at buyer's risk whether delivery has been made or not. Thus the delivery is not the conclusive proof that under whom
the property in the goods have been passed. There are certain aspects which need to be looked into that at the time in
question the goods belonged to whom. One thing has to be kept in mind that the intention of the parties is of supreme
importance to determine whether they intended to transfer property in goods or not. When the goods are specific then
the property in the goods passes to the buyer at the time of the contract of the sale of the goods. As the seller and the
buyer have the consensus ad idem thus as son as the contract is entered the goods are passed to the buyer. But if the
specific good is not in such a state that they can be delivered to the buyer or if the goods need to be used by the seller to
ascertain the price, then the goods are not passed unless the goods are in a deliverable state or the price is ascertained.
Then there are unascertained goods. The property in the unascertained goods do not pass to the buyer unless the the
goods of that description in a deliverable state are unconditionally appropriated to the seller. Though what this
unconditionally appropriation means is not properly defined by the act itself, but on reading sec 25 of the Act it can be
gathered that the unconditionally appropriation means that the seller does not retain the right of disposal of the goods.
Thus when the seller does not reserve any right for the disposal of the goods then the goods are said to be
unconditionally appropriated. By the judicial pronouncements it has also been established that the for the
appropriation to be unconditional the goods should be in a deliverable state and should be also according to the terms
of the contract. Also the goods should be the last act to be performed by the seller. Thus if these conditions are fulfilled
then the goods are said to be unconditionally appropriated.

Suggestions:
1. First of all Sec 23 talks about sale of unascertained goods and appropriation. But in the act unascertained goods are
not defined. Thus there needs to be definition of the term unascertained goods included in the Act itself. Thus
unascertained goods can be defined as:
Unascertained goods: Those goods which exists but needs to be adjusted or modified as per the needs of the buyer
to a specific description. It includes future goods also.
2. Secondly the goods should be unconditionally apportioned to pass it on to the buyer. Thus, there needs a definition
of the term unconditionally appropriated. It can be defined as:
Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or
custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve
the right of disposal, he is to be taken to have unconditionally appropriated the goods to the contract.

3. Once the unascertained goods are ascertained and appropriated to the contract then the become specific goods for
the purpose of the contract. Now they should be treated as specific goods and the same provisions as mentioned under
sec 20, 21 and 22 shall be applied to pass the property in the goods to the buyer.

4. Once the goods are ascertained then it becomes the sole discretion of the seller either to appropriate it to the contract
or not. The seller may apportion the goods to some other contract later in period with a motive of earning a greater
profit. Unless the goods are not appropriated to the contract with the assent of the buyer the ownership of the goods
remain with the seller. So if the seller fails to meet its contractual obligation then the buyer can only sue for the
damages but not for the specific performance of the contract. Thus, though the buyer can recover damages, the sole
purpose for which the goods were bought is failed. Thus it results in losing the sanctity of the contract. Thus there
should be a condition added that:
When the goods are ascertained then they should be apportioned to those contractual obligations which are to be
met first in ascending order of time unless there are compelling reasons to apportion it to other contractual
obligations.
Example: Suppose a seller contracts to sell 500 ton of wheat to A on 31 October 2015. He has presently only 50 ton
of wheat. He also contracts to sell 500 ton of wheat to B on 15 November 2015 at a higher price. So as per present law
when he acquires 500 ton of wheat he can apportion it either to first or second contract. Now, the seller may be lured
by the profit in second contract and apportion the wheat to second contract after getting the assent of the buyer. He
may escape of his first contractual obligation just by paying damages for the breach of contract. This creates an
uncalled difficulty to the first buyer and weakens the sanctity of the contract. But the situation can be changed by
making it obligatory on the seller to apportion the wheat to first set of contractual obligations. This will ensure that the
sanctity of the contract is maintained and it is not marred by petty profit motives.
Thus, determining the ownership of the goods is of so much importance, that it determines the rights and liabilities of
the seller and buyer and also the ownership determines that who will bear the risks and loses to the goods, it is of
utmost importance that each and every word in the act is properly defined without giving the scope of ambiguity to
creep in.