Section 23 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 18 says no property passes in unascertained goods until they are ascertained. Section 23 explains the step that usually makes goods ascertained and passes the property in them: unconditional appropriation to the contract, with the assent of the other party. Sub-section (2) adds a deemed appropriation where the seller delivers the goods to the buyer or to a carrier or other bailee for transmission to the buyer without reserving the right of disposal.
Where there is a contract for the sale of unascertained or future goods by description, and goods of that description in a deliverable state are unconditionally appropriated to the contract, by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property thereupon passes to the buyer. The assent may be express or implied, and before or after the appropriation. Delivery to the buyer or to a carrier for transmission, without reserving the right of disposal, is deemed unconditional appropriation.
Reading note
This article follows the consolidated text of the Act consulted (latest amendment shown: Act 28 of 1993); later amendments should be checked in the official text. Section 23 is one of the rules in sections 20 to 24 for finding when property passes, which section 19(3) says apply "unless a different intention appears"; see Sections 18-19. "Future goods" and "deliverable state" are defined in section 2(6) and 2(3). The inner heading "Delivery to carrier.—" is printed before sub-section (2); it is a heading inside section 23, not a separate section. Supply contracts under which goods are set aside and dispatched in lots are the usual place for these rules, and a vendor and supplier agreement should say when appropriation happens.
Section 23(1): unconditional appropriation
"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, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer."
Break it into its parts.
| Element | What the text says |
|---|---|
| Contract | a contract for the sale of unascertained or future goods by description |
| The goods appropriated | goods of that description and in a deliverable state |
| The act | unconditionally appropriated to the contract |
| Who appropriates | the seller with the assent of the buyer, or the buyer with the assent of the seller |
| The result | the property in the goods thereupon passes to the buyer |
The word "thereupon" means at that moment. No separate step is needed once the elements are met.
What "appropriated" and "unconditionally" add
The Act does not define "appropriated" in section 2. The ordinary sense in the section is that particular goods of the contract description are set apart or earmarked for this contract. "Unconditionally" means the appropriation is not made subject to some further condition. If the seller sets goods aside only "subject to final inspection" or "subject to payment", the question whether the appropriation is unconditional is a matter of the facts and the contract; the text gives no further test.
Assent, express or implied
"Such assent may be express or implied, and may be given either before or after the appropriation is made". Three points:
- the assent must be of the other party: buyer's assent where the seller appropriates, seller's assent where the buyer appropriates;
- it may be express or implied; and
- it may be given before or after the appropriation.
Example (the writer's own, not printed in the Act): Sagar Agro agrees to sell Tiwari Mills 100 tonnes of wheat "of the current crop, from our godown". No particular bags are set aside. Sagar Agro later loads 100 tonnes of that wheat into a truck marked for Tiwari Mills, and Tiwari Mills, which asked for exactly this, says nothing against it. The goods are of the contract description and deliverable, and Sagar Agro has set them aside with Tiwari Mills' assent, implied from its request. The property passes at that moment.
Section 23(2): delivery to the buyer or to a carrier
"Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a 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 conditions are:
- delivery in pursuance of the contract;
- delivery is to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer; and
- the seller does not reserve the right of disposal.
If all three are met, the seller is deemed to have unconditionally appropriated the goods to the contract. By section 23(1) that passes the property. The right of disposal is the subject of the next section in the series, section 25, taken up in its own article.
Example (the writer's own): Ghosh Spices hands 200 cartons, of the contract description and ready to ship, to Safe Move Carriers, a carrier named by the buyer, Lopez Foods, for transport to Lopez Foods. Ghosh Spices makes no reservation of the right of disposal. Under 23(2), Ghosh Spices is deemed to have unconditionally appropriated the cartons to the contract.
A "bailee" is a person to whom goods are delivered for a purpose. For the Contract Act idea of bailment and the bailor and bailee, see Section 148 of the Indian Contract Act, 1872; under section 3 of this Act the unrepealed provisions of that Act continue to apply so far as they are not inconsistent.
Comparison with neighbouring sections
| Section | Subject | Key idea |
|---|---|---|
| 18 | unascertained goods | no property until ascertained |
| 20 to 22 | specific goods | property passes by the contract, or after an act and notice |
| 23(1) | unascertained or future goods by description | property passes on unconditional appropriation with assent |
| 23(2) | delivery to carrier or bailee | deemed unconditional appropriation if the right of disposal is not reserved |
| 24 | goods on approval or sale or return | property passes on approval, acceptance or lapse of time |
For the next rule in the series, see Section 24, and for the specific-goods rules, sections 20 to 22.
Practical points
- Mark and record. Put the contract number or the buyer's name on the lot, and record the date. That shows what was appropriated and when.
- Get assent in writing. Assent may be implied, but an email saying "load lot 14 for us" is cleaner.
- Decide on the right of disposal before dispatch. If you wish to keep control until payment, say so in the contract or at dispatch; otherwise sub-section (2) may deem appropriation.
- Check the risk clause. Section 26 ties risk to the passing of property "unless otherwise agreed".
Need help with dispatch and ownership terms?
If your goods are drawn from bulk stock and dispatched through carriers, we can prepare or review the supply agreement so that appropriation, assent and the right of disposal are dealt with expressly.
Key takeaways
- Property passes in unascertained or future goods by description when goods of that description, in a deliverable state, are unconditionally appropriated with the assent of the other party.
- Assent may be express or implied, and given before or after appropriation.
- Delivery to the buyer or to a carrier or other bailee for transmission, without reserving the right of disposal, is deemed unconditional appropriation.
- The inner heading "Delivery to carrier" belongs to sub-section (2) of section 23.
- Reserve the right of disposal expressly if you want to keep control.
Read next
- Sections 18-19 of the Sale of Goods Act, 1930: goods must be ascertained and property passes when intended
- Section 24 of the Sale of Goods Act, 1930: goods sent on approval or on sale or return
- Section 25 of the Sale of Goods Act, 1930: reservation of right of disposal
- Section 148 of the Indian Contract Act, 1872: bailment, bailor and bailee
Disclaimer: Based on the consolidated text of the Sale of Goods Act, 1930 consulted on 2 October 2026, whose latest amendment shown is Act 28 of 1993. It explains the words of the statute only; later amendments and the way courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.