Historically, the cattle industry has relied on verbal agreements and handshakes to seal the deal. The final agreement is seldom reduced to writing, and each party may walk away with a different understanding of the terms of the verbal agreement. Carefully drafted written agreements setting out the agreed terms can eliminate disputes and prevent costly litigation. This article will attempt to inform the reader of basic aspects of a properly drafted bill of sale.

Misunderstandings can be avoided with a properly drafted bill of sale. For example: you purchase the hot futurity prospect of your dreams. Prior to allowing the bull to be shipped to your operation, the seller requires full payment. You pay the seller and make transportation arrangements for shipping the bull to your trainer. Unfortunately, prior to taking possession, the bull injures himself and will not be able to buck. Who bears the loss, buyer or seller? Generally, absent a written buy/sale agreement providing for a specified risk of loss shift, the risk of loss shifts from seller to buyer at the time payment is made. In our hypothetical scenario, the buyer would assume the loss.

In the event of conflict or disagreement, absent a written signed bill of sale, you may be barred from seeking relief from the judicial system. Most states have adopted the Uniform Commercial Code (UCC). Article 2 of the UCC governs the “sale of goods” which includes cattle transactions. The UCC section known as the “Statute of Frauds” requires that an agreement for the sale of cattle over $500 or transactions that by the terms of the agreement cannot be completed within one year must be in writing to be enforceable.

A properly drafted bill of sale should spell out all the agreed terms and conditions of the transaction. The first paragraph should clearly identify the name of the buyer and seller, their addresses and whether they are an individual, partnership or corporation.