Section 24 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 24 deals with goods that a seller delivers to a buyer for a trial period: "on approval", "on sale or return" or on "other similar terms". It says when the property in such goods passes to the buyer: when he signifies approval or acceptance or does any other act adopting the transaction, or, if he does neither, when the time fixed for return (or, if none, a reasonable time) expires without notice of rejection.
When goods are delivered on approval or "on sale or return" or other similar terms, the property passes to the buyer (a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction, or (b) if he does neither but retains the goods without giving notice of rejection, then on the expiry of the time fixed for return, or, if no time was fixed, on the expiry of a reasonable time.
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 24 is the last of the rules in sections 20 to 24 that section 19(3) offers for finding the parties' intention on the passing of property, "unless a different intention appears"; see Sections 18-19. Trial supplies, display stock and sample-lot arrangements are common in distribution, and the terms on which they are sent should be set out in an agreement drafted for the purpose.
The opening words
"When goods are delivered to the buyer on approval or 'on sale or return' or other similar terms, the property therein passes to the buyer—"
Three observations:
- the goods are delivered to the buyer; the section is about a transfer of possession (section 2(2): "voluntary transfer of possession from one person to another") that has not yet become a transfer of property;
- the terms are "on approval", "on sale or return" or "other similar terms"; the phrase "other similar terms" widens the section to arrangements that carry the same idea under other names; and
- the section then states two ways in which the property passes.
The section does not define "approval" or "sale or return". It uses the expressions as business terms and states what follows from them.
Section 24(a): approval, acceptance or an act adopting the transaction
"(a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction;"
The property passes when the buyer does one of these:
- signifies his approval to the seller;
- signifies his acceptance to the seller; or
- does any other act adopting the transaction.
The third limb is wide. It is not limited to words addressed to the seller; an "act adopting the transaction" can be conduct. The text gives no list of such acts, and none is supplied here.
Example (the writer's own, not printed in the Act): Prism Opticals sends Raju Eyewear six designer frames "on approval". Raju Eyewear writes: "We approve the frames and will keep all six." The buyer has signified approval to the seller. Under section 24(a) the property passes to Raju Eyewear at that point.
Second example (the writer's own): Raju Eyewear does not write, but fits lenses into two of the frames and sells them to customers. Selling or dealing with the goods as one's own can be an act adopting the transaction. Whether a particular act amounts to adoption depends on the facts; section 24(a) states only the words.
Section 24(b): keeping the goods without notice of rejection
"(b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time."
The conditions are:
- the buyer does not signify approval or acceptance to the seller;
- he retains the goods; and
- he does not give notice of rejection.
The result depends on whether the contract fixed a time:
| Case | When property passes |
|---|---|
| a time has been fixed for the return of the goods | on the expiration of such time |
| no time has been fixed | on the expiration of a reasonable time |
The Act gives no figure for a "reasonable time" and does not say how it is measured. This article therefore gives none.
Example (the writer's own): Joy Toys sends Eagle Stores 50 board games "on sale or return, to be returned within 21 days if not wanted". Eagle Stores keeps all 50 for 30 days and gives no notice of rejection. The time fixed for return has expired, and under 24(b) the property in the games has passed to Eagle Stores.
Example without a fixed time (also the writer's own): If the same goods had been sent without any stated return date, the property would pass on the expiry of a reasonable time, assuming the buyer kept them and gave no notice of rejection.
What notice of rejection does
The wording of (b) shows that notice of rejection is the buyer's protection. If, within the time, the buyer gives notice of rejection, the "retains the goods without giving notice of rejection" condition is not met. The text does not prescribe a form for the notice. A written notice with a date is safer than a phone call.
Comparing the two limbs
| Point | 24(a) | 24(b) |
|---|---|---|
| Buyer's conduct | signifies approval or acceptance, or does an act adopting the transaction | keeps the goods and gives no notice of rejection |
| What starts the transfer | the approval, acceptance or adopting act | the end of the fixed time, or of a reasonable time |
| Role of time | none | decisive |
| Notice of rejection | not mentioned | its absence is a condition |
How section 24 fits with its neighbours
- Section 19(3) says sections 20 to 24 are rules for finding the intention as to when property passes, unless a different intention appears. The parties' own terms for a trial supply come first.
- Section 23 deals with appropriation of unascertained goods; see the article on section 23.
- Section 25 allows a seller to reserve the right of disposal until conditions are fulfilled; see the article on section 25.
- Section 26 ties risk to the passing of property "unless otherwise agreed"; goods on approval are, until the property passes, at the seller's risk under that rule, subject to its provisos.
For the general idea of acceptance in contract formation, see Sections 7-9 of the Indian Contract Act, 1872. It is a separate law, applying under section 3 of this Act so far as it is not inconsistent.
Drafting points
- State the return date and what counts as notice of rejection.
- Say what acts are, or are not, to be taken as adopting the transaction (for example, paying, reselling or altering the goods).
- State who bears the risk and the cost of returning the goods.
- Keep a delivery challan or note showing that the goods went "on approval" or "on sale or return". That record shows the terms on which they were delivered.
Need help with trial or sale-or-return arrangements?
If you supply goods for trial, display or sale-or-return, we can draft the agreement with a clear return date, a notice procedure and a statement of when ownership and risk pass.
Key takeaways
- Section 24 applies to goods delivered on approval, on sale or return, or on other similar terms.
- Property passes when the buyer signifies approval or acceptance or does any act adopting the transaction.
- If he does neither but keeps the goods without notice of rejection, property passes on expiry of the fixed time, or of a reasonable time if none was fixed.
- The Act gives no period for a reasonable time.
- State the return date and the notice procedure in the contract.
Read next
- Section 23 of the Sale of Goods Act, 1930: unascertained goods, appropriation and delivery to carrier
- Section 25 of the Sale of Goods Act, 1930: reservation of right of disposal
- Section 26 of the Sale of Goods Act, 1930: risk passes with property
- Sections 7-9 of the Indian Contract Act, 1872: absolute acceptance
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.