Security Bills of Exchange

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.

A security bill of sale is a mortgage of goods. A bill of sale by way of security for money is void unless it is in accordance with the form prescribed by the Act.  It must set out the chattels and things concerned in the schedule.

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.

Definition of Bill of Sale

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.

Nature and Exclusions

As with a mortgage, the courts look at the substance of the transaction.  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;
  • 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

Licenses and authorities to take possession, other than by way of security for a debt, are not bills of sale.  However, if they are intended to secure a present or future debt, they are bills of sale.

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.

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.

Subject to Other Legislation

Charges and debentures by incorporated companies duly registered under the Companies Acts are not subject to the Bill of Sales legislation.  The exception applies to debentures.  A document which is a debenture in the commonly used sense, acknowledging or creating a debt and accompanied by a charge on the property of the company, enjoys the exception.

A deed of charge on the company’s assets is assumed to be a debenture for the purpose.  However, the full extent of the exception is not clear, and it may not apply to certain classes of security.

Any charge or other security issued by a company which is to be registered in the Companies Registration Office is exempt from registration under the legislation.

Agricultural charges under the Agricultural Credit Act are subject to their own special regime of registration and are exempt.

Registration I

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.

A bill of sale by way of security must be registered within seven days after execution or if execution took place outside the State, within seven days of the time when it would have, in the ordinary course of post, arrived in the State.

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.

Registration II

A copy of the bill of sale’s schedule must be lodged in the case of a bill by way of security. A copy of every schedule or inventory attached to a bill of sale must also be registered.  Accordingly, if a chattel is not capable of specific description, an individual cannot grant a bill of sale over it by way of security.

A bill of sale by way of security is void except as against the grantor in relation to movables, specifically described of which the grantor is not the true owner at the time of execution of the bill of sale.  Accordingly, security may not be given by an individual over after-acquired property.

Registration must be renewed every five years from the date of registration.  Renewal is undertaken by filing an affidavit stating the date of the bill and last registration, the names, residence, and occupation of parties and that the bill of sale is still subsisting as security.  The court may grant an extension of time where the omission is accidental or due to inadvertence.

Registration Issues

The transfer of a registered bill in itself need not be registered.  If there is an increase in the amount advanced, a further bill must be registered.

A memorandum of satisfaction may be entered when the debt secured by the bill is paid.  Permission to enter it unilaterally may be made by way of a unilateral application.  Where consent cannot be obtained an order to enter up satisfaction may be required from a court.

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 Security Not Registered rendered Void

A bill of sale by way of security is void, if

  • not in the statutory form,
  • not duly attested and duly registered;
  • the consideration is not set out,
  • it is subject to unregistered conditions in the declarations; or
  • if not renewed.

The money lent may be recovered with reasonable interest, as money had and received.  The document including a void bill of sale may be effective as regards provisions which are not part of the bill of sale.

The grantee of security may surrender his security on bankruptcy and prove his debt on the ordinary basis.  Bills of sale may be challenged under normal bankruptcy provisions regarding the grant of security.  They may be an unlawful preference or a fraudulent transfer of assets.

A bill of sale by way of security does not protect against distress for taxes or rates.  Liability to seizure remains where distress could have been made. Goods comprised in a bill of sale are protected against, execution levied on a judgment for rates recovered by the rating authority in court.

Grant of Security Bill of Sale

Any person over 18 years old who has mental capacity, may grant a bill of sale.

A Bill of Sale by way of security for consideration of less than £30 is void.  There must be a real advance of at least £30

A bill of sale by way of security gives title to the grantee, giving him a right of seizure in the circumstances prescribed in the Act.  When they are seized, the grantor’s legal interest ceases.  He may apply for relief to the High Court within five days of seizure. He may thereafter seek redemption in the same way as in respect of a mortgage of land.  If the debt is repaid, he is entitled to have the entry satisfied in the register.

Within five days of seizure, the court, if satisfied regarding the payment of the money or otherwise, so that the cause of seizure no longer exists, may restrain the sale or removal of the chattels or make such other order as is appropriate.  The sale may be restrained on condition that overdue installments are paid.  Generally, the court will restrain seizure and sale where the arrears are paid into court.

The grantor of the bill of sale may redeem it before the due date.  He must pay up all interest and other sums due, including expenses.

Damages may be awarded for wrongful seizure.  In the case of a valid bill, damages are limited to the grantor’s interest in them.  Where goods are damaged, the grantor may not recover damages but may be entitled to credit on redemption.

In the case of a bill by way of security, the right to possession remains with the grantor until seizure in accordance with the provisions of the Act.  A court order is required to seize goods which are in the possession of a receiver.


Personal goods assigned under a bill of sale by way of security may not be seized or taken possession of unless one of the statutory conditions/circumstances apply.  They are as follows:

  • if the grantor makes default on the payment of a sum secured at the time provided;
  • if the grantor defaults in the performance of any obligations in the bill and necessary for maintaining the security;
  • if the grantor becomes bankrupt or commits an act of bankruptcy;
  • if the goods are distrained for rent, rates or taxes;
  • if the grantor fraudulently removes or allows the goods to be removed from the premises;
  • if the grantor wrongfully sells the goods; they may generally be recovered notwithstanding that they are bought by the purchaser in good faith without notice.
  • if the grantor without reasonable excuse fails to produce the last receipt for rents, rates, and taxes;
  • if execution is levied against the goods of the grantor under any judgment.

Where the sale is not in the course of the grantor’s business, a person dealing with him is responsible to the grantee.  However, if the grantee allows the grantee to be left in possession of the goods and to hold himself out as having property in them, a purchaser from the grantor in the ordinary course of business without notice obtains a good title as against the grantor.

Enforcement Issues

Goods seized under a bill of sale given by way of security must be retained for five days prior to removal and sale.  During this time, the grantor may apply for relief.  Removal may take place if the grantor has consented, prior to the end of this period.  After that time has passed, the grantee may take the goods and sell them, under an implied power or if added, under an express power.

Provision may be made in accordance with the statutory form for the distribution of the proceeds of sale.  Provision may be made for unpaid interest, expenses on the date of sale.

Where two or more bills of sale are given over the same goods, priority is governed by the date of registration.  This is the case as regards both absolute bills of sale and bills of sale by way of security.

Goods subject to a bill of sale may be seized for distress by way of rents and in certain cases, rates and taxes.  The grantee of the bill may remove his goods before distress is levied. This is not fraudulent as against landlord.

Under the principle of marshaling, the landlord who distrains on goods subject to the bill and those not subject to the bill may be required to satisfy himself from those not subject to the bill.

References and Sources

Irish Texts
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
UK Texts
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