EVERYDAY LAW: Bills of sale – the nature and effect
In response to an e-mail, this week, I shall be explaining the nature and effect of bills of sale.
Bills of Sale are governed by the Bills of Sale Act Chapter 306 of the Laws of Barbados.
A bill of sale is a document by which the title to goods is transferred from one person to another. A bill of sale is designed for transactions in which the seller or donor is to remain in possession of the goods after disposing of the property in them.
Typically, when we use the term “bill of sale”, we are referring to a conditional bill of sale which refers to an assignment or transfer of personal chattels to another person by way of security for the payment of money.
The bill of sale creates a security in favour of the lender (i.e. the grantee of the bill) which permits the lender the right to seize the chattel(s) if certain conditions are satisfied.
The term “bills of sale” means bill of sale over personal chattels. By virtue of the Bill of Sale Act, personal chattels comprise “goods and chattels such as household effects, chattel houses, and other articles capable of complete transfer by delivery”.
Requirements of the Bill of Sale Act
The main requirements of the Bills of Sale Act are:
1. Every bill of sale must set forth the consideration given.
2. Every bill of sale must have annexed to it a schedule containing an inventory of the personal chattels to which the bill applies.
3. Every bill of sale must be attested and registered within seven (7) clear days after the execution thereof.
4. Every bill of sale must be stamped in accordance with the Stamp Duty Act.
5. Every bill of sale must be attested by at least one credible witness, not being a party thereto.
6. An affidavit must be filed with the Registrar of Corporate Affairs within seven (7) clear days after the making of the bill of sale deposing to the due execution of the bill of sale and the attestation and containing a description of the residence and occupation of the person making or giving the same and of every attesting witness to such bill of sale.
7. The registration of the bill of sale must be renewed at least every five years otherwise it becomes void.
8. Every bill of sale must be in accordance with the form given in the schedule of the Act. This does not mean that the bill must follow the statutory form word for word but substantially in the prescribed form.
The above requirements are very strict and a failure to a comply with them may have the effect of rendering the bill of sale ineffective.
Power of Seizure
The grantee of a bill of sale may seize the goods only on one of the five (5) grounds specified in s. 7 of the Bills of Sale Act, namely:
(1) if the grantor makes default in payment of the sum or sums secured by the bill at the time therein provided for payment or in the performance of any covenant or agreement contained in the bill of sale and necessary for maintaining the security;
(2) if the grantor becomes bankrupt or suffers the goods of any of them to be distrained for rent, rates and taxes;
(3) if the grantor fraudulently either removes or suffers the goods or any of them to be removed from the premises;
(4) if the grantor does not, without reasonable excuse, upon demand in writing by the grantee, produce to him his last receipts for rent, rates and taxes; and
(5) if the execution is levied against the grantor’s goods under any judgement at law.
Cecil McCarthy is a Queen’s Counsel. Send your letters to: Everyday Law, Nation House, Fontabelle, St Michael.