Bill of Sale Fusing Contract and Property Law: Draw the Law

bill-of-sale-as-a-contract

Last week I discussed why an invoice (take by itself) is not a contract.  As was stated, it only shows a quantity and a price, but there is no evidence that the side being sent the invoice has accepted those terms.  Unless they have signed or there is another underlying contract an invoice alone does not make a contract.  During that week’s discussion I briefly mentioned a bill of sale.  If you remember in the court case I quoted it stated that an invoice is not a bill of sale, which is true.  A bill sale, unlike an invoice, facilitates a transfer of title to property and at the same time evidences contract.

Why is a Bill of Sale a Contract versus An Invoice?

If you remember the several Draw the Law posts about contract law, I mentioned that a contract requires mutual assent (which is offer and acceptance) and consideration.  In your typical bill of sale the seller agrees to sell the property to the buyer, if the buyer signs according the to the terms of what is described in the bill of sale there is acceptance of that offer. The consideration is the underlying exchange of cash for title to the property.  Notice that there is a transfer of property and a contract in one document.

The seller offers to sell the car at a certain price, which the buyer accepts. (Offer and acceptance). The consideration is the transfer of title for money. In addition, the bill of sale offers evidence that the buyer now owns the car.

Is there a Difference between Property Law and Contract Law?

Yes, there is a difference between the two; much of the confusion in our modern usage of legal terms comes from the fact that property and contracts law are tend overlap in many instances, such as in a real estate deal.  However, the two of them are very different.  The rights that arise under property law are different than the rights that arise under contract law. Generally (and simply) speaking, property law gives rights to the owner over something (i.e. land or a car) to be enforceable against other persons.  However, contractual rights give you enforceable rights against a particular person.

The owner of real property can tell everyone they cannot come onto his land, he does not need a contract for that, but a buyer-seller can only enforce the rights they are given under a contract against each other (and no one else).

Today’s document, the bill of sale, transfers ownership over something, thus giving the buyer the ability to enforce their rights over their newly acquired property against all others. However, the exchange of valuable consideration between the two parties, for instance money for a car, gives the two parties contractual rights to sue against each other if the terms of the deal are broken.

Contrast this with a contractual agreement that does not grant the nonowner a property interest, nor the rights to enforce against all others.  For example, a license for copyrighted software – remember you the software user are only granted a license.  Therefore, you cannot enforce the copyright against all others whereas the software maker can, all you can enforce is that you did not receive access to use the software or it malfunctioned and the company can enforce you went beyond the license or you did not pay them for it.

The software company grants a license to a purchaser to use the software, not ownership. Therefore, the software company reserves the right to enforce the copyright against ALL people who infringe whether or not they have an agreement. Under the license agreement the software company and purchaser have certain rights to enforce against each other.

Do Bills of Sale Require Any Other Information?

In many states (as well as under federal law), for particular pieces of property, such as cars, boats, land, etc . . . the bill of sale also requires other specific information to effect the transfer and evidence a contract.  For example, check the City and County of Honolulu’s form for a bill of sale for a car at this link.  On the form you will see the need to state the mileage of the vehicle and have it notarized.

 

[author] [author_image timthumb=’on’]http://www.alohastartups.com/wp-content/uploads/2011/09/RyanKHew.png[/author_image] [author_info]I am a practicing attorney in Honolulu, HI helping small businesses with their transactional and compliance needs. Contact Me Today: Web| 808.944.8400 @RKHewEsq Ryan K. Hew, Attorney At Law[/author_info] [/author]

*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.