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Bill of Sale: What You Should Know

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A bill of sale definition is a legal document that records the transfer of ownership of an item from one party to another. This document is essential for various transactions, including selling a car, motorcycle, boat, or other valuable items. This article will explore the importance of bills of sale, what they should include, and how it differs from deeds.

What Is a Bill of Sale? 

Buying and selling refer to exchanging goods, services, or assets between two parties. A purchase-sale document is a contract between the buyer and the seller, stating the terms and conditions of the transaction, including the agreed-upon price, the description of the goods or assets, and any warranties or guarantees. This document is crucial in legally establishing the transfer of ownership and protecting the rights of both parties involved in the transaction. Luckily, there are lots of bill of sale templates you can use to or easily create a new one.

How Does a Bill of Sale Work?

There are two types of bills of sale: Absolute Bill of Sale and Promissory Note. Let’s look closer at how they differ and when we use each type.

Absolute Bill of Sale

This type of Bill of Sale transfers the ownership of the property from the seller to the buyer without any conditions or contingencies. The seller guarantees that they have the legal right to sell the property, and the buyer accepts the property “as is,” meaning that they are aware of any defects or issues and agree to purchase the property regardless of these issues. An Absolute Bill of Sale is commonly used to sell personal property, such as vehicles, furniture, or electronics.

Сonditional Bill of Sale

It is a type of Bill of Sale that includes a promise from the buyer to pay the seller a specified amount of money, either in installments or as a lump sum, at a later date. This type of Bill of Sale meaning is often used in transactions involving more significant assets or when the buyer does not have the full purchase price available at the time of the sale. The conditional Bill of Sale is a legally binding document and can be used in court as proof of sale if the buyer fails to fulfill their promise to pay the agreed-upon amount.

Is a Bill of Sale Required?

Whether or not you need an absolute or conditional Bill of Sale depends on the specifics of your transaction. Generally, an absolute Bill of Sale is necessary when there is a transfer of ownership of personal property between two parties. On the other hand, a conditional Bill of Sale is more appropriate in situations where the buyer cannot pay the full purchase price upfront and agrees to make payments over time.

Having a Bill of Sale in place is essential to protect both the buyer and the seller in the event of a dispute, as it establishes the terms and conditions of the transaction and provides a legally binding record of the agreement. The costs associated with creating these documents are minimal compared to the potential legal issues that may arise if a transaction is not properly documented.

Difference Between Bill of Sale and Deed

While a bill of sale vs deed may seem similar, they serve different purposes and are used in different types of transactions. A Bill of Sale transfers ownership of personal property, such as vehicles, appliances, or furniture, while a Deed transfers ownership of real property, such as land or a home. 

A Deed is a more complex document that involves a more detailed description of the property and specific legal language and requirements to ensure that the transfer of ownership is valid and enforceable. Additionally, Deeds must be recorded with the appropriate government agency, such as the county recorder’s office, while Bills of Sale do not require this step.


Understanding the role and importance of a sale bill and a Promissory Note is essential for anyone buying or selling personal property. These documents provide legal protection for both parties and ensure the terms and conditions of the transaction are clear and agreed upon. By familiarizing yourself with these concepts and using the appropriate documents in your transactions, you can minimize potential disputes and protect your rights and interests as a buyer or seller.


I'm a passionate full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.

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