Identify the seller’s remaining readiness obligation
Under section 21 of the Sale of Goods Act, 1930, if specific goods are identified and agreed at the time of contracting and the seller is bound to do something to make them deliverable, ownership does not pass under the default rule until the act is done and the buyer has notice that it was done. Section 19 makes the parties’ intention controlling and the statutory rules apply in the absence of a different intention. Under section 2(3), readiness is judged by whether the buyer would be bound under the contract to take delivery in that state.
Read the applicable text: India Code: Sale of Goods Act, 1930, sections 2, 19–26 and 36(5).
Distinguish readiness from later operational steps
Separate mandatory finishing, assembly or preparation from optional checks or transportation arrangements. A seller’s internal job completion does not establish notice. If goods were already deliverable and the seller was still bound to do something to ascertain the price, examine section 22 instead. If the goods were not identified and agreed when contracting, assess appropriation under section 23 as applicable.
Check the effective contract and notice
Keep the version of the specification that defines readiness, the dated completion record and evidence that the buyer had notice. If tasks change, preserve the amendment and decide whether it changes readiness or merely changes a delivery arrangement. For separately agreed lots, identify the goods and dates individually; do not split an inseparable contract by spreadsheet assumption.
Reconcile custody, ownership and payment separately
The seller may receive an advance while still owing a readiness obligation. Similarly, a completed unit may remain in the seller’s custody after the buyer has notice. Section 36(5) generally allocates the costs of making the goods deliverable to the seller, unless agreed otherwise. Consider any reservation of title and risk terms under sections 25 and 26. Determine accounting and GST timing separately rather than treating this legal ownership schedule as the reporting answer.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Notice follows completion
A machine is contractually ready on 29 March 2027, but the buyer first has notice on 2 April. Four calendar days separate the events, and the default section 21 trigger falls on 2 April.
Illustrative example 2: Required work remains
An identified lot contains 50 units and requires all to be configured before delivery under an inseparable contract. Forty-five are configured at close, leaving five unfinished. The contract readiness gate is not yet met.
Illustrative example 3: Separate lots with distinct notices
Three independent lots contain 20, 30 and 50 units. Only the first and third are complete and notified. On those facts, 70 units pass and 30 remain open.
Illustrative example 4: Separate readiness costs from onward carriage
The seller incurs ₹36,000 to complete mandatory assembly and ₹14,000 of onward carriage. The total outlay is ₹50,000. Identify the ₹36,000 preparation component for the section 36(5) default and check the carriage allocation separately.
Illustrative example 5: Do not mark incomplete testing as readiness
A named machine requires 12 contract tests before it is deliverable. Eleven pass and one mandatory test is pending. The 11 completed tests do not satisfy the remaining readiness condition.
Illustrative example 6: Reconcile completion and notice across units
Of 120 separately contracted units, 90 are complete and notices are evidenced for 80 of those. Ten complete units still lack notice and 30 are incomplete; 40 remain open.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Read the title and delivery terms | Contract and amendments. |
| 2 | Confirm identified goods | Lot and serial records. |
| 3 | Identify mandatory preparation | Specifications and acceptance requirements. |
| 4 | Distinguish logistics and pricing tests | Activity list and pricing clause. |
| 5 | Track each outstanding act | Production or readiness file. |
| 6 | Document completion date | Approved completion evidence. |
| 7 | Prove buyer notice | Dated communication and delivery record. |
| 8 | Check separability and reservation | Contract analysis and title terms. |
| 9 | Reconcile custody and payment | Warehouse, dispatch and advances. |
| 10 | Approve closing classification | Lot-level legal, tax and accounting review. |
Sixteen practitioner FAQs
1. Does identification alone transfer title?
No. Check contractual intention and outstanding preparation.
2. What makes goods deliverable?
The state in which the buyer would be bound to take delivery under the contract.
3. Does every inspection delay title?
No. Identify its contractual function.
4. Is section 21 the same as section 22?
No. One addresses readiness and the other price ascertainment for already deliverable goods.
5. Can an internal completion certificate prove buyer notice?
It proves completion, not necessarily notice.
6. Can the buyer have notice before physical dispatch?
Yes, if evidenced.
7. What if the buyer inspects in person?
Document what the inspection establishes about actual notice.
8. Can a party stipulate a different title trigger?
Yes. Review section 19 and the terms.
9. What if the buyer supplied some components?
Determine who still owes the readiness obligation.
10. Can a part shipment decide the entire lot’s title?
Check whether the contract supports splitting.
11. Does a paid deposit settle title?
No. Check the applicable triggers.
12. Can finished goods still be held by the seller?
Yes. Custody and ownership can differ.
13. What if the order describes an unallocated batch?
Consider the unascertained-goods rules separately.
14. Does title necessarily settle risk?
Review section 26 and any different agreement.
15. Does the analysis prescribe the GST invoice date?
No. Apply the relevant tax timing rules separately.
16. What should the cutoff file show?
Identified goods, contractual readiness, actual completion and buyer notice.
Official sources
India Code: Sale of Goods Act, 1930, sections 2, 19–26 and 36(5)