Everything You Need to Know About How a Bill of Sale Works
What is a Bill of Sale?
For those who have never read the definition of a bill of sale before, it is simply a document which details in writing the sale of a good or service from one person or party to another. The purpose of a bill of sale is to serve as legal evidence that the sale did indeed occur just in case one of the parties attempts to claim that the item was either stolen or not truly sold or purchased.How a Bill of Sale Works
Depending on the type of transaction in question, a bill of sale can work in either a complicated or simple way. For example, a receipt given to you by a restaurant is indeed a bill of sale in the eyes of the law and is one of the most specific forms. However, certain goods may have nuances that create more complicated bills of sale. To that end, it’s worth looking at the two different types of bills of sale to see how they work:Absolute vs. Conditional Bill of Sale
In short, a bill of sale comes in two different types: an absolute bill of sale and a conditional bill of sale. The former is just a simple piece of evidence that shows a transaction occurred between a buyer and seller and that the goods have changed hands. On the other hand, a conditional bill of sale is more complicated and gives the issuer of the bill of sale the right to seizure of the good in the event of something.Automobile bills of sale are common examples of conditional bills of sale, as a person does not actually get the pink slip and full ownership of the vehicle until it is paid off. If buying a car from another person, they could write a clause that states, for example, that if the check given to them bounces then they have the right to repossess the vehicle.
The 7 Different Parts of a Bill of Sale
Understanding a bill of sale based on the above can still be challenging, which is why breaking down the different components can help. For anyone considering drafting up a beautiful and legally compliant Bill of Sale, don’t neglect to include the following seven points:1. The Date of Purchase: First and foremost, the bill of sale will need to include the date that the purchase occurred for legal reasons in case the matter ever ends up in court.
2. The Name and Address of Both Parties: The names and addresses of the parties involved in the sale will also need to be listed, along with whether they are the seller or buyer. This name must be the parties legal name that matches government issued identification.
3. The Amount Paid for the Transfer of Ownership: Naturally, one of the most important parts of the bill of sale is the amount of money that was paid for the good or service.
4. The Description of the Assets: To ensure that the asset the buyer has in their possession is indeed the asset that was sold, there will need to be a description of the asset included.
5. The Guarantee the item is Free of Claims: Unless the bill of sale is conditional, there must be proof that the transaction between the buyer and seller is completely free of claims and was able to be made.
6. The Applicable Representations: In the event there are representations present within the bill of sale, it will need to be stated exactly what they are.
7. The Signatures: Finally, and perhaps the most important aspect of a bill of sale, the signatures from both parties must be present.
Ensure your purchase is legally binding
The last thing anyone needs is legal trouble after believing they have successfully made a sale or purchased a good from another person. Unfortunately, this can happen all too often which is why ensuring a bill of sale is in place is crucial. Use all of the above information to determine whether or not you are responsible for creating this item and, if so, get the document drafted as soon as possible to protect yourself legally.Do You Need An Attorney?
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Posted - 08/10/2023
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