Bills of Sale
The Bill of Sales Act is intended to prevent persons obtaining credit on the basis of their apparent ownership of goods, which they do not in fact own. The legislation is in some aspects narrow, but in other ways has wide application and great practical significance. There are two types of bill of sale. An absolute bill of sale is one by which ownership of goods is transferred.
The requirements of the Bill of Sales Act apply to goods which are already owned and which are disposed of or mortgaged by the owner by a written document (a bill of sale). There are many important exceptions to the legislation. Some of the exceptions have been used in order to provide mechanisms to give secured credit in relation to the purchase of goods, without being subject to the onerous registration requirements of the Act.
A bill of sale is a written document by which the ownership of goods (personal chattels) is transferred. It can take any form, such as an assignment, a transfer, a declaration of trust without transfer of possession, inventories of goods with receipts, receipts for purchase monies and other assurances. It also includes powers of attorney, authorities, and licenses to take possession of personal chattels as securities for debt. It includes agreements whether intended or not to be followed by execution of any other instrument, by which a right in equity to any personal chattels is conferred.
The Bill of Sales legislation applies to chattels and movables. This means goods, articles capable of transfer by delivery, growing crops, trade machinery, fixtures when assigned or charged separately from the land.
“Personal chattels” means goods, furniture, and other articles capable of complete transfer by delivery, and (when separately assigned or charged) fixtures and growing crops. It does not include
- chattel interests in real estate,
- fixtures (except trade machinery as defined), when assigned together with a freehold or leasehold interest in any land or building to which they are affixed,
- growing crops when assigned together with any interest in the land on which they grow;
- shares or interests in the stock, funds, or securities of any government, or in the capital or property of incorporated or joint stock companies;
- choses in action;
- stock or produce upon any farm or lands which by virtue of any covenant, agreement or custom ought not to be removed from any farm at the time of making or the giving of such bill of sale.
Fixtures and Trade Machinery
Fixtures are not subject to the Act, as they are part of the land. Where, however, they are separately assigned or charged apart from the land, they are subject to the Act. The Acts do not apply where fixtures (not being trade machinery) are conveyed or assigned together with freehold or leasehold interest in land to which they are affixed.
Trade machinery used or attached to any factory or workshop is deemed to be a personal chattel and is accordingly subject to the Act. Excluded trade machinery includes fixed motive-powers, such as the water-wheels and steam-engines, steam-boilers, donkey engines, and other fixed apparatus; fixed machinery, such as the shafts, wheels, drums, and their appurtenances; pipes for steam, gas, and water in a factory or workshop.
Fixed trade machinery may be part of the mortgaged premises. Where an intention to give a power to sell the trade machinery apart from the premises is provided for in the instrument, it may be a bill of sale.
Definition of Bill of Sale
If a transaction is, in fact, a bill of sale, it is treated as such and the Act will apply. Accordingly, if the documents are a sham, then their nature may in substance be such, that they are within the legislation. For example, a sale and leaseback may be characterised as a bill of sale, if this is the substance of the arrangement and the sale and lease have insufficient reality.
Conversely, if its true substance is such that it is not a bill of sale, a transaction may be outside the Acts, notwithstanding that it appears, at first sight, to be within the Acts.
A bill of sale does not include
- general assignments for the benefit of creditors (but see below);
- marriage settlements;
- transfers or assignments of any ship or vessel.
- transfers in the ordinary course of a business or trade;
- bills of sales of goods outside the State or at sea;
- bills of lading, warehouse-keepers certificates, warrants or orders for the delivery of goods; or
- any other documents used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by indorsement or by delivery, the possessor of such document to transfer or receive the goods thereby represented:
Scope of Legislation I
The legislation applies only where the holder or grantee has power with or without notice, immediately or at a future time, to seize and take personal chattels comprised in the bill of sale.
The legislation does not apply where possession of the chattel passes immediately to the grantee. Accordingly, the legislation does not apply to pledges and absolute sales, because possession passes immediately. Possession may include, constructive possession, where the pledgee obtains constructive possession of the goods, through holding symbolic documents or similar documents of title.
The Bill of Sales legislation applies to documents and not to transactions. Accordingly, oral contracts do not need to be registered and are not subject to the Act. If, however, the agreement is reduced into writing, regardless of whether this is legally or practically necessary, the legislation will apply. A declaration of trust without transfer, if reduced to a document may be a bill of sale. However, if the transaction is completed without writing, a later confirmatory document may not be subject to the Act, such that its non-registration would invalidate the transaction.
Scope of Legislation II
The Acts do not apply to ordinary business agreements for the hire or hire purchase of chattels. The person who takes the chattel by way of hire is not the owner. The license to seize allows the owner to retake possession of his own property.
The Acts do not apply where the owner sells the goods and by an independent, contract hires them back. This is so, even though he is given a right to repurchase the same for an equivalent sum. However, the sale and the re-hiring must be distinct and the arrangement must not be a disguised security arrangement.
An agreement to give a bill of sale is itself a bill of sale and is registrable as such. An oral agreement to give a bill of sale is not a bill of sale within the Acts.
Where the grantor has disposed of his interest in goods by an absolute bill, he ceases to be owner. Therefore, a subsequent bill by way of security is void and does not take priority over an earlier unregistered absolute bill, even though the latter is registered first. That grantor is not the true owner within the meaning of the Act.
- an assignment of book debts in respect of specified debtors or debts due under specified contracts;
- an assignment of book debts in a transfer of a business as a going concern, made for value; or
- an assignment for the benefit of creditors generally.
Outside of Act I
Marriage settlements are not bills of sale. This includes instruments creating trusts in order to make provision for marriage. Prenuptial contracts involving the transfer of chattels after marriage are exempt, even if carried out after marriage.
A settlement or transfer between a husband and wife of chattels in their common home is not within the Act. They are deemed to be in common possession. The principle also applies to persons sharing a common home or establishment.
Transfers of ships and vessels are not bills of sale even if not given in the form under the Merchant Shipping Act or registered thereunder. The exception applies to unfinished ships including materials being used or prepared in its completion, but not actually on board.
Outside of Act II
The transfer of goods in the ordinary course of business are excluded from the definition of a bill of sale. The exception which covers commercial practice, such as those relating to documents used to prove the possession or control of goods, may evolve over time with commercial practice.
Letters to bankers for advances of goods in the hands of third parties by which the borrower is to hold the goods in the third party’s hands on the banker’s account and under lien to them. are within the exception as they are within the ordinary course of business.
A letter of hypothecation accompanying a deposit of goods is not a bill of sale. A document charging goods in the ordinary course of mercantile business, or an agreement for a vendor’s lien on a bill of lading or on goods in transit are within the exception.
Absolute Bill of Sale
An absolute bill of sale need not be in any specific form. A bill of sale by way of security must be in the form of the schedule to the Acts. Otherwise, it is void. If a bill of sale by way of security cannot be fitted into the prescribed form, it may not be given at all. Minimal variations only are permitted. It must be substantially in the prescribed form. The bill of sale must be attested in the statutory form, with descriptions and addresses.
The terms and conditions are largely prescribed by the statutory form. To this extent, the statutory conditions are mandatory. Collateral agreements which are part of the contract are not allowed in the bill of sale. Even an oral variation is not permitted. Certain terms and conditions and stipulations are not subject to the Act and their absence is not fatal.
An absolute bill of sale must be attested by a solicitor. It must be confirmed that it has been explained to the grantor by the solicitor. Failure to do so would make it void as against third parties. It is enough that the attestation says that the explanation has been given. An affidavit proving due attestation must be filed when the bill is registered.
Both absolute bills and bills by way of security must be registered. The bill of sale and exhibit and a true copy of the bill and the attestation of the execution of the bill together with the affidavit with the requisite details must be presented to the Registrar and a copy of the bill of sale and affidavit must be filed with the Central Office of the High Court.
A bill by way of security must be duly attested by one or more credible witnesses who are not a party to it. An affidavit must prove due execution and witnessing and the residence and occupation of the grantor and witnesses.
An absolute bill must be registered within seven days after being made. Seven days refers to seven actual days. If the period expires on a Sunday or other day when the Registrar’s office is closed, it may be registered on the first day on which it is open which follows.
Once the goods are sold under an absolute bill of sale, no further registration or renewal is necessary. This is provided that possession of the goods is taken by the grantee.
An application may be made to the court to rectify an error or extend the time for registration. It must be shown the failure was due to an accident or inadvertence. If time is granted for registration, it may be on conditions such as to priority, notice or otherwise as the court deems fit.
The register is available for inspections in the court offices. The entries may be inspected by the public. Office copies are prima facie evidence of content. Searches may be made of the Bill of Sales Register on payment of a statutory fee.
Bill by way of Sale Not Registered
A bill of sale which is not by way of security is not invalidated under the Act, by reason of non-registration. Such a bill is valid as between the parties. It is void as against third parties, in particular creditors, trustees, and assignees in bankruptcy of the person granting the bill, sheriffs, officers and other persons executing against the grantor.
The bill is void against such persons in relation to chattels comprised in the bill of sale which after the time of bankruptcy or of execution, and after the expiration of seven days for registration, are in the possession of the grantor. If before these events, the grantee takes actual possession, registration is not required. Registration is required if the grantor remains in apparent possession after seven days and the bill has not been registered.
Goods are in apparent possession for so long as they are at a person’s premises, in his actual or apparent possession. Apparent possession is possession of a grantor as long as they remain at his house, mill, warehouse, buildings, yard, premises occupied by him or used or enjoyed by him in any place whatsoever.
If the grantee takes actual possession and the goods no longer appear to be in the possession of the grantor, even though they remain on the premises, this may be sufficient to avoid the legislation.
References and Sources
Modern law of personal property in England and Ireland 1989 Bell
Consumer Law Rights & Regulation 014 Donnelly & White
Commercial Law White 2012 2nd ed
Commercial & Economic Law in Ireland 2011 White
Commercial Law 2015 Forde 3rd ed
Irish Commercial Precedents (Looseleaf)
Commercial & Consumer Law: Annotated Statutes 2000 O’Reilly
Personal Property Law: Text and Materials 2000 Sarah Worthington
Personal Property Law (Clarendon Law Series) 2015 Michael Bridge
The Law of Personal Property 2017 Professor Michael Bridge and Prof. Louise Gullifer
The Principles of Personal Property Law 2017 Duncan Sheehan
Crossley Vaines on Personal Property 1967 by J C Vaines
The Law of Bills of Sale 2017 James Weir
Palmer on Bailment 2009 Norman Palmer
The Reform of UK Personal Property Security Law: Comparative Perspectives 2012 John de Lacy
The Law of Personal Property Security 2007 Hugh Beale and Michael BridgeCases