Legal Definitions - sale on approval

A sale on approval is a type of sales contract where goods are delivered to a buyer primarily for their personal use, with the understanding that the buyer has the option to return the goods if they are not satisfied. The sale is not considered final, and ownership (title) of the goods does not transfer to the buyer, until the buyer explicitly approves the goods, or fails to return them within a specified period. During this approval period, the risk of loss or damage to the goods typically remains with the seller.

Here are some examples to illustrate this concept:

• Online Fashion Boutique: An online clothing store offers a "try before you buy" program for its new collection of designer dresses. A customer orders three dresses, knowing they have seven days to try them on at home and return any or all items they don't wish to keep. The customer is only charged for the dresses they decide to keep after the trial period.

  This is a sale on approval because the customer receives the dresses for personal use with the option to return them. The sale is not final until the customer approves of the dresses they want to purchase. If one of the dresses were lost or damaged during the initial shipment to the customer, the online store (seller) would bear that loss, as ownership had not yet transferred.

• Home Appliance Store: A local electronics retailer allows customers to take a new smart refrigerator home for a 30-day trial period. The customer wants to ensure the refrigerator's features and size are suitable for their kitchen and lifestyle before making a final commitment. If they are not satisfied, they can return it for a full refund.

  This scenario exemplifies a sale on approval. The customer has possession of the refrigerator for evaluation and personal use. The purchase is not complete, and ownership does not transfer, until the 30-day period expires without a return, or the customer explicitly confirms their satisfaction. If the refrigerator were to malfunction due to a manufacturing defect during the trial, the store (seller) would typically be responsible for the repair or replacement, as the risk of loss remains with them.

• Art Gallery for Interior Design: An interior designer takes a large painting from an art gallery on a two-week trial to see how it looks in a client's living room. The agreement states that if the client approves of the artwork, the sale will be finalized; otherwise, the painting will be returned to the gallery.

  This is a sale on approval because the painting is delivered for the purpose of evaluation in a specific setting before a final purchase decision is made. The sale is contingent upon the client's approval. If the painting were accidentally damaged during transport back to the gallery by the gallery's own delivery service (and not due to the designer's negligence), the gallery (seller) would bear the loss, as the sale was not yet final and title had not passed.