A bill of sale is a written receipt showing evidence of a sale. It identifies property or merchandise sold by a particular seller, the date and place the item was sold, and the precise amount of money, or monetary equivalent the item was sold for.
A bill of sale serves as evidence that the ownership (title) of property by one party is transferred to another party.
When to Use a Bill of Sale
A bill of sale represents the condition or terms determining the agreement of the sale. Any buyer or seller of personal property, animals, jewelry, automobiles, or other merchandise should use a bill of sale for the protection of both the buyer and the seller.
A Bill of Sale Protects
After a sale, later disputes or disagreements can occur. A basic bill of sale comprised for the private sale of an automobile may contain the phrase “as seen, as is”, meaning there are no guarantees as to the condition of or warranties associated with the item being sold.
Once the automobile is removed from the seller’s location, should something break down a couple of weeks later, the buyer cannot hold the seller responsible because there were no warranties for the automobile when the buyer bought it.
The use of a bill of sale in private sale transactions is important to ensure both parties know the specifications and facts before the finality of the sale. Adding clauses and asking for clarifications before signing are the entitlement of both parties.
Is a Bill of Sale the Same as a Sales Agreement/Contract?
A sales agreement or sales contract would contain the detailed information of the seller and buyer, including:
- Names and addresses
- Telephone numbers
- Any co-signers involved
Sales agreements can also include:
- Sale type
- Dates initiating the agreement
- Dates for contract completion
- Dates for closing
- Dates of ownership
Sales agreements are contracts detailing the terms and conditions of monetary purchases.
Purpose of a Sales Contract
Initially, it may appear there is not much difference between a bill of sale and a sales agreement (contact). Buyers and sellers use them both when interacting in the transactions of selling merchandise. Despite their similarities, there are important fundamental differences in the function and timing of their usage.
When a buyer and a seller initially come together in response to thinking about entering a sales transaction, a sales contract is used to lay out the terms of the potential sale. The terms stipulate what the buyer will agree to in purchasing the merchandise, as well as the agreement the seller makes to sell the merchandise. The sales contract is used before the merchandise is bought or sold. For instance, a buyer contemplates buying an industrial freezer. A sales contract would:
- Lay out the details of the particular type of freezer
- List the cost
- The location of delivery
- The right of the buyer to inspect the freezer upon its delivery
- The right to reject the freezer if it does not conform to the agreement terms
Once the seller delivers the industrial freezer, and it is accepted by the buyer, the seller will produce a bill of sale to transfer to the buyer ownership of the freezer.
The bill of sale is used after the exchange when ownership of the merchandise is transferred from the seller to the buyer. It functions as a type of receipt, so that if a question of ownership should arise at a later time, the buyer has proof of that ownership.