Bulk Sale Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Bulk Sale, written in plain English, along with examples of how it is used.

What is Bulk Sale?

(n) Bulk Sale is the complete sale or sale of major part of the inventory available with the trader. Bulk sale is made when goods are sold to retailers, restaurants or when clearing of the inventory for any reason

History and Meaning of Bulk Sale

Bulk Sale, in legal terms, refers to the complete or major sale of a business's inventory outside of the ordinary course of its regular business or trade. This was largely devised to ensure that the seller of the inventory can't sell off all the goods, pocket the money, and then leave the creditors holding the bag. Bulk sales laws are closely intertwined with the Uniform Commercial Code (UCC) Article 6, which provides rules for the sale of goods. The purpose of having specific bulk sale laws is to protect the rights of creditors by requiring the seller to give proper notice to all of its creditors before selling the inventory. Such a notice gives creditors enough time to contest the sale if they have any legitimate objections.

A bulk sale notice is filed to avoid a risk that a seller will transfer most of their assets in bulk to another buyer, without ever paying off their debts or paying only a small fraction of what they actually owe to creditors. This would essentially leave creditors with fewer resources from which they can recover what they are owed. Bulk sale notices are intended to protect creditors by notifying them when such sales will take place, allowing them to object and potentially alleviate the likelihood of such a scenario.

Examples of Bulk Sale

  1. A restaurant that decides to sell its entire inventory of alcoholic beverages to a nearby liquor store would constitute a bulk sale.
  2. A wedding dress store looking to sell its entire inventory to another retailer would be considered a bulk sale transaction.
  3. A business that produces candles and sells all its candle-making supplies to another company would be performing a bulk sale.

Legal Terms Similar to Bulk Sale

  1. Uniform Commercial Code (UCC) - A set of standardized rules that govern commercial transactions.
  2. Creditor - An institution or individual to whom an entity owes money.
  3. Inventory - A complete list of goods, materials, or supplies on hand.
  4. Bill of Sale - A legal document that transfers ownership of an asset from one entity to another.