Similar to a receipt, a bill of sale is a written instrument that attests to a buyer’s purchase of property from a seller. A bill of sale generally includes the transacting parties’ contact information, a description of the item sold, all warranties made by the seller, any conditions attached to the sale, the date of transfer, price, payment schedule(s), and the parties’ signatures–among other provisions.
‘Bill of Sale’ forms are commonly used in the transfer of motor vehicles, aircrafts, and ships. Transactions involving other types of property are recorded using receipts, invoices, deeds, and other written instruments.
In jurisdictions where ownership does not depend on physical possession of property, buyers lacking physical possession may use a bill of sale as proof of their ownership rights.
A bill of sale and a receipt are similar instruments, but a receipt is generally less formal than a bill of sale. A bill of sale, for example, must usually contain a description of the exchanged good(s). That is not the case for receipts–which may be used to provide record of payment without any description of what the payment is for. In other words, receipts are not bills of sale but a bill of sale may serve as a receipt.
Some states have statutes addressing the usage of bills of sale in private transactions. Florida’s Uniform Commercial Code, for example, does not require that a bill of sale be given in connection with a sale. However, when a bill of sale is issued, it is “expected to be construed in a manner that adequately records the transaction so as to prevent unnecessary future disputes”. (13 Florida Jur Forms Legal & Bus. § 42:56)
Types of Bills of Sale
There are two main types of bill-of-sales: the (1) absolute bill of sale (used in the sale of goods, as governed by the common law and the UCC) and the (2) conditional bill of sale (used for borrowing and financing).
An absolute bill of sale completely conveys property, without any restrictions on the buyer or scheduled payments to the seller. Such bill of sale would be issued, for example, in the full cash purchase of a motor vehicle.
Absolute bills of sale generally detail the form of payment and the condition of the property. They are ideal for transactions that involve payment in full and items sold in “as is” condition.
A conditional bill of sale conveys property with conditions on the buyer’s ownership. This kind of bill of sale is most appropriate for transactions involving loans, like the purchase of a house. When purchasing a home using a mortgage, the mortgagor (borrower) conveys conditional ownership of the property to the mortgagee (lender). The mortgagee is granted ownership of the property on the condition that the mortgagor retain physical possession, and upon paying their debt, regain full ownership. Conditional bills of sale are ideal for sellers that wish to place specific requirements on buyers.
[Last updated in June of 2020 by the Wex Definitions Team]