Bill of sale: Overview, definition, and example
What is a bill of sale?
A bill of sale is a legal document that records the transfer of ownership of an asset or property from one party (the seller) to another (the buyer). It outlines the details of the transaction, including the description of the item being sold, the purchase price, and the date of transfer. This document serves as proof of the transaction and is typically used for the sale of goods, vehicles, equipment, or other personal property. It protects both the buyer and seller by clearly documenting the terms of the sale.
In simpler terms, a bill of sale is a receipt or official record that shows a property or item has been sold and ownership has been transferred to the buyer.
Why is a bill of sale important?
A bill of sale is important because it legally documents the transfer of ownership and can be used as evidence in case of disputes, tax matters, or legal claims related to the item. For the buyer, it proves ownership of the item, which may be necessary for registration, insurance, or other legal requirements. For the seller, it confirms that they have relinquished ownership and protects them from future claims regarding the item.
For SMB owners, a bill of sale is essential when buying or selling business assets, equipment, or vehicles. It provides clear legal documentation that the transaction was completed and ownership has been transferred.
Understanding a bill of sale through an example
Imagine you run a small business and decide to sell an old delivery van. After agreeing on the price with the buyer, you complete a bill of sale. The document includes details such as the van’s make, model, year, vehicle identification number (VIN), and the agreed-upon sale price. Both you and the buyer sign the bill of sale, confirming the transfer of ownership. The buyer now has proof that they legally own the van, and you have confirmation that the sale is complete.
In this case, the bill of sale serves as both a receipt for the buyer and a record for the seller.
Example of a bill of sale clause
Here’s an example of what a bill of sale might look like in a transaction:
“This Bill of Sale acknowledges the transfer of ownership of the vehicle described below from the Seller to the Buyer. The Seller hereby sells, transfers, and delivers ownership of the vehicle to the Buyer, for the agreed sum of $X. The vehicle’s make, model, and VIN are as follows: [details]. Both parties agree that the sale is final, and the Buyer assumes full responsibility for the vehicle upon completion of the transaction.”
Conclusion
A bill of sale is a key document for SMB owners when buying or selling assets, ensuring that the transfer of ownership is legally documented and recognized. Whether you're selling equipment, vehicles, or other property, a bill of sale provides clear evidence of the transaction, protecting both the buyer and the seller. Having a properly executed bill of sale helps avoid misunderstandings, disputes, and legal complications, making it an essential part of business asset management.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.