Glossary and Definitions
Bill of Sale (Canada)
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A Bill of Sale is a legal document between a seller and a buyer, documenting that a specific purchase was made on a certain date, at a certain place, and for a certain amount of money or in exchange for another valuable item. The Bill of Sale generally states that the Seller had legal title to the item of interest, and sold it to the buyer, thus transferring the title to the buyer. Bills of Sale may be necessary for any sizable transaction, such as a car, jewelry, antiques, electronics, sporting equipment, etc. A Bill of Sale is generally not appropriate for real estate or property transactions, or for sales of stock or shares.
The purpose of a Bill of Sale is essentially to document the transaction and ensure that it was conducted in a way that both the buyer and seller agreed upon. Having the terms of the transaction in writing can help to prevent disputes and misunderstandings from occurring. Another benefit of a Bill of Sale is that it encourages the buyer and seller to discuss various topics beforehand, such as warranties and terms. If a dispute were ever to arise, having a Bill of Sale is useful because it can act as evidence in court. In addition, the Bill of Sale acts as proof that the buyer is now the owner of the item. In this way, the potential for fraud or for unfair seizure of the item is minimized.
A Bill of Sale typically contains three fundamental parts:
- The full names and contact information (address, postal code, phone numbers if desired) of the buyer and seller, and a statement to the effect that the seller is transferring title to the buyer.
- A complete description of the item being purchased, including make, model, color, serial or registration numbers, and any other numbers or marks that identify the item.
- The purchase price for the item. This may also denote what currency will be used, and how payment will occur (e.g. cash or credit card)
A Bill of Sale may be "absolute" (simply evidencing a transaction) or "conditional" (assigning an item as security for the payment of money). In an absolute Bill of Sale, the transaction is considered completed, whereas in a conditional Bill of Sale, the seller is able to acquire the item as collateral until the buyer fully pays the agreed-upon price for the item. If the buyer defaults, the Bill of Sale may be used by the seller to regain full title to the item.
To create a Bill of Sale, you may talk to your lawyer or alternately use a template form that you may find in person (e.g. at an office supply store or bank) or online. Several companies offer fully customizable Bill of Sale legal forms at reasonable prices that should cover most situations.
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