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Bulk Sales Law - Explained

What is Bulk Sales Law?

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

What is a Bulk Sales Law?Where do Bulk Sales Laws come from?Academic Research on Bulk Sales Law

What is a Bulk Sales Law?

A bulk sales law is a federal or state law that guides the transfer of bulk sales (all of the business assets or inventory) from a business to a buyer (generally another business) that occurs outside of the ordinary course of the business. 

Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY

Where do Bulk Sales Laws come from?

This law protects creditors and also prevents business owners from avoiding creditors through bulk transfers. Bulk sales must be registered with a federal or state government agency so that creditors can be notified of bulk transfers whenever they occur.

Bulk sales laws at the state level fall under the Universal Commercial Code (UCC). Bulk sales laws at the federal level are contained in the Uniform Fraudulent Transfer Act, Chapter 11 of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. 

Bulk sale done outside the tenets of either federal or state bulk sales laws include the following:

  • sales done with or without the intention of defrauding or evading creditors but which eventually turned out to be fraudulent.
  • A bulk sale with no adequate payment or fair value of assets sold.
  • A bulk sales or transfer to an entirely different business entity outside the course of the business.
  • A bulk sale to just one party.

Related Topics

  • Participants in the bankruptcy process?
  • Key concepts behind the bankruptcy process?
  • Absolute Priority Rule
  • Pari Passu
  • What rules govern the bankruptcy process?
  • Bankruptcy Abuse Prevention and Consumer Protection Act
  • American Bankruptcy Institute Definition
  • Authority of the bankruptcy court?
  • Authority of the trustee (debtor in possession) in bankruptcy?
  • Debtor in Possession
  • The bankruptcy estate?
  • Bulk Sales Law
  • Automatic stay in bankruptcy?
  • Claims by creditors of the bankruptcy estate?
  • Voluntary and involuntary bankruptcy?

Academic Research on Bulk Sales Law

  • Bulk Sales Law and Adequate Protection of Creditors, Weintraub, B., & Levin, H. (1952). J. Nat'l Ass'n Ref. Bankr., 26, 99.
  • Bulk Sales Laws: A Study in Economic Adjustment, Billig, T. C. (1928). University of Pennsylvania Law Review and American Law Register, 77(1), 72-102. 
  • Bulk Sales Laws: Transactions Covered by These Statutes, Billig, T. C., & Smith, K. R. (1932). W. Va. LQ, 39, 323.
  • The Law of Sales Under the Uniform Commercial Code, Henning, W. H., Lawrence, W. H., & Wallach, G. I. (1992). 
  • Bulk Sales: Texas Law and the Uniform Commercial Code, Larson, L. V. (1952). Sw. LJ, 6, 417 
  • Bulk Sales Laws: A Study in Statutory Interpretation, Billig, T. C., & Smith, K. R. (1931). W. Va. LQ, 38, 309. The Problem of Transfers under Bulk Sales Laws: A Study of Absolute Transfers and Liquidating Trusts, Billig, T. C., & Branch, W. L. (1937). Michigan Law Review, 35(5), 732-761. 
  • Bulk Sales Laws: Businesses Included, Miller, F. W. (1954). Wash. ULQ, 1. 
  • The Uniform Commercial Code-Sales, Bulk Sales, and Documents of Title, Carrington, P. D. (1960). Wyo. LJ, 15, 1. 
  • Bulk Sales Laws: Meaning to Be Attached to the Quantitative and Qualitative Requirements Phrases of the Statutes, Miller, F. W. (1954). Wash. ULQ, 283. 
  • Bulk Sales Laws: Property Included, Miller, F. W. (1954). Wash. ULQ, 132.
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