layout: page
title: Bill of Sale — US Drafting Reference
description: Drafting reference for US bills of sale — transfer of personal property title, UCC Article 2 title-passing rules, motor-vehicle and boat requirements, asset-purchase closing deliverables, and AS-IS sales.
permalink: /handbook/us/contracts/bill-of-sale/
lastVerified: 2026-05-10
sources:
  - url: https://www.law.cornell.edu/ucc/2/2-401
    title: UCC § 2-401 — Passing of Title
    accessed: 2026-05-10
  - url: https://www.law.cornell.edu/ucc/2/2-403
    title: UCC § 2-403 — Power to Transfer; Good Faith Purchase
    accessed: 2026-05-10
  - url: https://www.law.cornell.edu/ucc/2/2-501
    title: UCC § 2-501 — Insurable Interest and Identification
    accessed: 2026-05-10
  - url: https://www.law.cornell.edu/ucc/2/2-509
    title: UCC § 2-509 — Risk of Loss in Absence of Breach
    accessed: 2026-05-10
  - url: https://www.law.cornell.edu/ucc/2/2-510
    title: UCC § 2-510 — Effect of Breach on Risk of Loss
    accessed: 2026-05-10
  - url: https://www.law.cornell.edu/ucc/2/2-316
    title: UCC § 2-316 — Exclusion or Modification of Warranties
    accessed: 2026-05-10
  - url: https://www.ecfr.gov/current/title-49/subtitle-B/chapter-V/part-580/section-580.5
    title: 49 CFR § 580.5 — Truth in Mileage Act Disclosure
    accessed: 2026-05-10
  - url: https://www.law.cornell.edu/uscode/text/46/12101
    title: 46 USC § 12101 — Vessel Documentation
    accessed: 2026-05-10
confidence: high

A bill of sale is a short, focused contract instrument that documents the transfer of personal property title from a seller to a buyer. Unlike a deed (which transfers real property), a bill of sale operates on movable, tangible property — motor vehicles, boats, equipment, livestock, art, business assets, and the universe of personal property that is bought and sold in everyday commercial life. It is one of the oldest contract forms (the term “bill of sale” appears in English common law as early as the 1500s) and remains a routine closing instrument in transactions ranging from a $500 used-car sale to multibillion-dollar corporate asset purchases. This page is the US drafting reference for the contract type. Cross-reference contract law basics for offer-acceptance and capacity, UCC Article 2 for the sale-of-goods overlay, and standard clauses for boilerplate.

Function — Transfer of Personal Property Title

A bill of sale’s operative function is to transfer title. The transfer is effected by language of conveyance — the seller “sells, assigns, transfers, and conveys” to the buyer specified personal property in exchange for the consideration recited. At common law, title to personal property passes at the moment the seller and buyer agree it shall pass, subject to the more specific UCC Article 2 rules for sales of goods (discussed below). The bill of sale is the documentary record of that transfer.

Three structural points distinguish a bill of sale from other contract instruments:

• It is an executed instrument, not an executory contract. A purchase agreement may be signed weeks before closing; a bill of sale is typically signed at closing, simultaneously with payment.
• It conveys title to identified, existing property. Future or unascertained property cannot be conveyed by bill of sale — only by purchase contract followed by a later bill of sale once the property is identified.
• It does not require consideration to be recited in detail, but does require consideration to exist. A bill of sale for $1 and other valuable consideration is enforceable; a bill of sale reciting no consideration may be re-characterised as a gift and require additional formalities.

UCC Article 2 Governs Sales of Goods

For any bill of sale covering goods (movable things, including specially manufactured goods, but excluding investment securities and the like), UCC Article 2 supplies the governing rules unless displaced by the parties. The relevant provisions:

UCC § 2-401 — Passing of Title. Title to goods passes from seller to buyer at the time and place explicitly agreed, or, absent explicit agreement, at the time and place the seller completes physical delivery (or, for goods to be moved, at the time and place of shipment if no delivery commitment, or at destination if a destination contract). Section 2-401 also clarifies that any “reservation” of title by a seller after physical delivery is limited to reservation of a security interest under Article 9, not retention of legal title.

UCC § 2-403 — Power to Transfer; Good Faith Purchase. A purchaser of goods acquires all title that the transferor had or had power to transfer. Three rules deserve attention: (i) a seller with voidable title may transfer good title to a good-faith purchaser for value; (ii) “entrusting” of possession of goods to a merchant who deals in goods of that kind gives the merchant power to transfer all rights of the entruster to a buyer in ordinary course; (iii) a buyer with no notice of any breach by the seller against a third party generally takes good title. The bill of sale’s recital that the seller has “good and marketable title, free of all liens and encumbrances” is the contractual counterpart to the § 2-403 doctrine.

UCC § 2-501 — Identification. The buyer obtains a special property and insurable interest in goods when they are identified to the contract — even before title passes. Identification matters for risk of loss, casualty insurance, and tax treatment.

UCC § 2-509 — Risk of Loss in Absence of Breach. Where the seller is required to ship by carrier and the contract does not require delivery at a particular destination, risk of loss passes when the seller duly delivers the goods to the carrier. Where the contract requires delivery at a destination, risk of loss passes on tender at destination. Where the goods are held by a bailee, risk passes on the buyer’s receipt of a negotiable document of title or acknowledgement by the bailee. In other cases, for merchant sellers, risk passes on receipt by the buyer; for non-merchant sellers, risk passes on tender of delivery.

UCC § 2-510 — Effect of Breach on Risk of Loss. Where the goods so fail to conform that the buyer has a right of rejection, risk of loss remains on the seller until cure or acceptance. Where the buyer rightfully revokes acceptance, the buyer may treat the risk of loss as having rested on the seller from the beginning.

Required Elements of a Bill of Sale

The minimum drafting elements of a complete bill of sale are:

1. Identification of the parties. Full legal name and address of seller and buyer. For corporate parties, state of incorporation; for individuals, sufficient identification for title-records purposes.
2. Description of the property. Sufficient specificity to identify the property uniquely. For motor vehicles: make, model, model year, vehicle identification number (VIN), licence plate (if any). For boats: hull identification number (HIN), Coast Guard documentation number (if any), state registration number (if any). For equipment: manufacturer, model, serial number, year of manufacture. For art: artist, title, medium, dimensions, year. For livestock: breed, age, identifying marks/brands/ear tags. For business assets in an asset-purchase deal: typically by reference to a schedule.
3. Consideration. The price or other value given for the transfer. Specific dollar amount is preferable to “$1 and other valuable consideration” for evidentiary and tax purposes.
4. Transfer language. “Seller hereby sells, transfers, assigns, and conveys to Buyer…” The active conveyance language operates as the present transfer.
5. Warranties or disclaimers. As discussed below.
6. Date and signature(s). Seller’s signature is the operative formality. Buyer’s signature is customary but typically not required. Notarisation as required by state law (motor vehicles in particular).

Warranties and Representations

A bill of sale typically includes warranties or representations as to title and condition. Three standard patterns:

Bill of Sale with Warranty. Seller warrants (a) good and marketable title; (b) freedom from liens and encumbrances; (c) seller has full right and authority to sell; (d) the property is in good operating condition (or as described).

Bill of Sale without Warranty. Seller transfers the property “AS IS, WHERE IS” with no warranty as to condition, but typically retains the warranty of title. The “AS IS” disclaimer disclaims implied warranties of merchantability and fitness for particular purpose under UCC § 2-316(3)(a). Conspicuousness is required — typically all-caps treatment.

Quitclaim Bill of Sale. Seller transfers whatever title or interest seller may have, with no warranty even as to title. Used in salvage sales, abandoned-property sales, and certain bankruptcy/UCC § 9-610 dispositions.

Disclaimer (AS IS). THE PROPERTY IS SOLD “AS IS, WHERE IS,” AND SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. BUYER ACKNOWLEDGES THAT BUYER HAS HAD THE OPPORTUNITY TO INSPECT THE PROPERTY AND IS RELYING SOLELY ON BUYER’S OWN INSPECTION AND JUDGMENT.

Motor Vehicle Bills of Sale

Motor vehicle title transfer is governed by state DMV statutes in addition to UCC Article 2. Most states require:

• Title certificate transfer. The seller endorses the back of the certificate of title and delivers it to the buyer, who applies for re-titling in the buyer’s name. The bill of sale documents the sale price (for sales-tax computation) and the parties; the title certificate is the principal title-passing document.
• Odometer disclosure. 49 CFR § 580.5 — implementing the federal Truth in Mileage Act — requires a written odometer disclosure on every motor-vehicle sale of a vehicle less than 20 model years old (effective 2021 NHTSA rule extending the prior 10-year window). The disclosure must be on a state-prescribed form or on the title certificate. False odometer disclosure is a federal criminal offence under 49 USC § 32709.
• State-specific bill-of-sale forms. Many states publish official forms — California REG 135 (“Bill of Sale”), Texas Form 130-U (“Application for Texas Title and/or Registration” which includes a bill-of-sale section), Florida HSMV 82050, New York DTF-802. These forms typically include odometer disclosure and sales-tax computation in addition to the bill-of-sale elements.
• Notarisation. Required in some states (e.g., Louisiana, West Virginia, Ohio for certain transactions) and recommended in all for evidentiary value.
• Lien release. If the vehicle is subject to a lien, lien-release language or a separate lien-release instrument is required for clean title.

Boat and Vessel Bills of Sale

Vessels add a federal-law overlay. 46 USC § 12101 governs Coast Guard documentation for vessels of five net tons or more used in commerce, fishing, or recreation. A documented vessel’s title is transferred by a Coast Guard-recordable bill of sale (CG-1340), often in addition to any state title transfer. Undocumented vessels (typically smaller recreational craft) are titled at the state level under state title statutes, with HIN identification required by 33 CFR § 181.23. The bill of sale should include the HIN, Coast Guard documentation number (if applicable), state registration number, manufacturer, model, length, hull material, and propulsion type.

Asset Purchase Agreement Context

In larger commercial deals, a bill of sale is a closing deliverable executed under an Asset Purchase Agreement (APA). The APA contains all substantive terms (price, allocation, representations and warranties, indemnification, conditions to closing). The bill of sale is a separate short instrument transferring title to the tangible assets — equipment, inventory, fixtures, machinery, vehicles, supplies. Intangible assets (contracts, intellectual property, customer lists, receivables, regulatory permits) are transferred by separate instruments: assignment and assumption agreements for contracts, IP assignments for intellectual property, AR purchase agreements for receivables.

The drafting pattern is to cross-reference the APA: “Pursuant to and subject to the terms and conditions of the Asset Purchase Agreement dated [date] between the Parties (the ‘APA’), Seller hereby sells, transfers, assigns, and conveys to Buyer all of Seller’s right, title, and interest in and to the personal property described on Schedule 1 hereto (the ‘Tangible Assets’).” Representations and warranties remain in the APA — the bill of sale should not duplicate them but may incorporate them by reference.

Notarisation Requirements

Notarisation requirements for bills of sale vary by state and by transaction type:

• Motor vehicles. Required by statute in several states (Louisiana, West Virginia, Ohio for trade-ins, Maryland for certain transactions). Recommended in all states for evidentiary value.
• Boats / vessels. Coast Guard-documented vessel bills of sale must be witnessed by two parties or notarised; state-titled vessel requirements vary.
• Real-property-related transfers. Notarisation is generally required for documents to be recorded in real-property records. While a bill of sale itself transfers personal property (not real property), affixed equipment or fixtures may straddle the categories and warrant notarisation for recording.
• High-value or contested transfers. Notarisation is recommended regardless of statutory requirement.

Tax Implications

Bills of sale create tax events:

• Sales tax. Most states impose sales/use tax on personal property sales. The bill of sale records the sale price, which is the tax base. Exemption certificates (resale, manufacturing, agricultural, non-profit) are documented separately.
• Use tax. If sales tax was not collected at point of sale, the buyer typically owes use tax to the buyer’s home state. The bill of sale is documentary evidence of the transaction.
• Capital gains. For the seller, the sale is a capital event if the property was a capital asset. The bill of sale evidences the sale price for cost-basis and gain calculation.
• Section 1060 allocation. In asset-purchase deals, 26 USC § 1060 requires both parties to allocate the purchase price among the acquired assets using a residual method. The allocation is reported on IRS Form 8594.

Bulk Sales — UCC Article 6

The 1989 revision of the UCC repealed Article 6 (bulk sales) and most states have followed (only California, Maryland, and a few others retain modified versions). Where it applies, Article 6 requires that a buyer of substantially all the seller’s inventory in a non-ordinary-course transaction give notice to seller’s creditors before closing, on pain of becoming liable to those creditors. Practitioners in remaining-Article-6 states should verify compliance procedures.

Sample Bill of Sale Skeleton

A complete bill of sale typically includes:

1. Title. “Bill of Sale” (or “Bill of Sale and Assignment”).
2. Date. Date of execution.
3. Parties. Seller and Buyer identification.
4. Recitals. Brief description of the underlying transaction (often referencing the APA in commercial deals).
5. Consideration. Amount paid (or “$1 and other valuable consideration”).
6. Conveyance language. “Seller hereby sells, transfers, assigns, and conveys…”
7. Description of property. Sufficient specificity, or by reference to attached schedule.
8. Representations and warranties (or disclaimer). Title, freedom from liens, condition (or “AS IS”).
9. Further assurances. Seller agrees to execute additional documents reasonably necessary to perfect the transfer.
10. Governing law. Typically seller’s home state or place of delivery.
11. Signatures. Seller’s signature (required); Buyer’s signature (customary); notarisation (as required).
12. Schedule of property. Detailed list if applicable.

Bibliography

• UCC § 2-316 — Exclusion or Modification of Warranties
• UCC § 2-401 — Passing of Title
• UCC § 2-403 — Power to Transfer; Good Faith Purchase
• UCC § 2-501 — Insurable Interest and Identification
• UCC § 2-509 — Risk of Loss in Absence of Breach
• UCC § 2-510 — Effect of Breach on Risk of Loss
• 49 CFR § 580.5 — Truth in Mileage Act Disclosure
• 49 USC § 32709 — Penalties for odometer fraud
• 46 USC § 12101 — Vessel Documentation
• 26 USC § 1060 — Asset Purchase Price Allocation

Cross-references

• Contract Law Basics — offer-acceptance, consideration, capacity
• UCC Article 2 — full sale-of-goods overlay
• Standard Clauses — boilerplate (governing law, severability, further assurances)
• Software License — sale vs. license distinction; software typically not sold by bill of sale

Disclaimer: This content is informational, not legal advice. Last verified: 2026-05-10. Always consult licensed counsel for binding decisions.