Bill of Sale

Article byAbhilash Ramachandran
Reviewed byDheeraj Vaidya, CFA, FRM

What is the Bill of Sale?

A bill of sale is a legal document that serves as proof of a sale and purchase transaction and records the transfer of ownership from one person to another, which signifies that the goods have been sold to another person.

It is used for transactions involving a transfer of movable and tangible goods ownership. For example, the sale of equipment, animals, cars, furniture, or appliances can be documented in a bill of sale. The seller typically produces the document, and both parties involved in the transaction can gain protection from the document. In addition, it can be used for tax reporting, accounting, and insurance purposes.

To simplify, the retail bill given at a shop when you buy groceries also counts as a bill of sale but is often termed a tax invoice. The only difference is that the Bill of Sale describes the transaction, and the conditions are fully stated.

Examples of Bill of Sale with Sample Templates

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Template  #1

Matrix Inc. is a seller of heavy machinery. Fuller Inc. has found all the equipment at Matrix Inc. required for its new project.Therefore, the bill of sale sample template for the transaction between these two parties will look like the below:

BE IT ACKNOWLEDGED that for payment with a total amount of $3,000,000, of which a full receipt is acknowledged, Matrix Inc., the signatory at this moment, sells and assigns to Fuller Inc. all equipment stated below:

Bill of Sale Example 1
Example 1.1
Example 1.2

Such sale is subject to the conditions and representations that are entirely described below:

Seller agrees on receipt of $3,000,000 in payment for the above-listed heavy equipment. Moreover, the said equipment is fully paid for. The seller authorizes and ascertains to the best of their knowledge the description of such a product; and that all the details aforementioned are legitimate and accurate. While the equipment is under the seller’s possession, features of the said equipment are not changed or altered. The seller has not agreed with anyone doing such an act.

Seller authorizes to Buyer that the seller reserves the complete authority in selling and transferring the equipment mentioned above. The equipment is sold free from all liabilities, debtsLiabilities, DebtsLiability is a broad term that includes all the money or financial obligations the company owes to the other party. In contrast, the debt is the narrow term and is part of the liability which arises when the company raises funds by borrowing money from the other party.read more, and other relevant detail and oppose any disputes or claims they are under and of and other relevant details and opposes any disputes or claims they are under and of whatever nature. Furthermore, the seller is not fully aware of any hidden damages to the equipment above. It is best to the seller’s knowledge that the equipment being transferred and sold is good and working. Otherwise, the said equipment will be marked in ‘as-is condition and delivered or shipped to its designated location.

Example 1.3

Template #2

Since he was a child, John has been fond of vintage cars and couldn’t resist getting himself the 1969 Lamborghini Miura P400S. He struck the deal for $500,000, and here is his Bill of Sale sample template.

BE IT ACKNOWLEDGED that for payment of $500,000, the full receipt of which is acknowledged, the undersigned RM Sotheby’s (the seller) at this moment sells and transfers to John Pepe (Buyer) the following described motor vehicle:

Bill of Sale Example 2

Such sale is subject to the conditions and representations that are entirely described below:

Seller acknowledges receipt of $500,000 as full payment for the vehicle from the Buyer and title transfer with immediate effect.

It has been agreed that the seller will allow the Buyer 7 days for an independent mechanic to have the vehicle inspected and cancel the sale of the vehicle if the Buyer finds the inspection unsatisfactory.

If the sale is not completed, the seller will retain $20,000 of the full payment to cover costs and effort in re-advertising.

While the vehicle is under the seller’s possession, the seller certifies to the best of the seller’s knowledge that the features or the odometer reading are not changed, altered, setback, or disconnected. The seller has not agreed with the seller or anyone doing such an act.

Seller authorizes to Buyer that the seller reserves the complete authority in selling and transferring the vehicle mentioned above. The vehicle is sold free from all liabilities, debts, and other relevant details and opposes any disputes or claims they are under and of whatever nature.

Furthermore, Seller is not fully aware when it comes to any hidden damages to the Vehicle mentioned above. It is best to the Seller’s knowledge that the Vehicle being transferred and sold be in good and working condition. Otherwise, the said Vehicle will be marked in ‘as is’ condition and will be delivered or shipped to its designated location.

Example 2.1

Conclusion

  • A bill of sale is a legal document that stands as evidence for a sale-purchase transaction and is valid in any court of law.
  • The seller of the goods typically issues it.
  • Transfer of ownership is recorded in the bill of sale.
  • It can be simple or complex, depending on the type of transaction.
  • It is used for private transactions involving valuable items like art, machinery, vehicles, etc.

This has been a guide to what Bill of Sale is and its definition. Here we provide examples of bills of sale and sample templates for Machinery and Motor vehicles. You can learn more about accounting from the following articles –