Bill of sale definition
/What is a Bill of Sale?
A bill of sale is a document that describes the sale of goods or property by a seller to a buyer. This is a legal document that clarifies the existence of an asset transfer in exchange for consideration paid by the buyer. A bill of sale can take the form of a receipt for a purchase at a store, or it can be a much more detailed document that describes a significant sale, such as the transfer of ownership in an office building.
Both parties to a sale should retain their copy of the bill of sale. This can then be used as a source document for the recordation of the related accounting transaction.
Contents of a Bill of Sale
Below are the typical contents of a bill of sale:
Document title. Clearly labeled as "Bill of Sale."
Date of sale. The date when the transaction took place.
Identification of the parties. States the name and address of the seller and buyer.
Description of the item being sold. A detailed description of the item being sold, including:
Make, model, and year (if applicable).
Serial number, VIN (for vehicles), or other unique identifiers.
Condition of the item (e.g., "as-is" or "in good working condition").
Purchase price. The agreed-upon amount for the item.
Payment terms. Details of how the payment is to be made (e.g., cash, check, installment, etc.).
Warranties or disclaimers. Any guarantees provided by the seller about the condition or functionality of the item.
Acknowledgment of ownership transfer. A statement affirming that the seller has the legal right to sell the item and is transferring ownership to the buyer.
Signatures. The signatures of the seller and buyer, and possibly a witness, to confirm the asset transfer. A notarization may also be included.
For specific types of items (e.g., vehicles, real estate, boats), the bill of sale might also include additional fields such as odometer readings or lien information. Always consult local laws to ensure the document meets legal requirements for the jurisdiction.
The Conditional Bill of Sale
A variation is the conditional bill of sale, in which the document is not finalized until some additional event occurs. For example, if a buyer were to borrow $50,000 from a seller in order to purchase a plot of land, the land would remain in the buyer’s possession as long as he made ongoing loan payments to the seller under the terms of the agreement.