A Bill of Sale should only be used for "as-is" purchases, when payment in full will be made once the item is exchanged. It expressly disclaims any warranties that relate to the quality or fitness of the product.
A Bill of Sale acts as a receipt for both parties. The seller can use it to prove that an item was sold to the purchaser "as-is", and the buyer can use it to prove that payment in full was given to the seller. It also provides a sale date to both parties, which can show when the responsibility of the item was transferred. Both the purchaser and the seller can use it as evidence of the price paid for tax purposes.
It is also important to realize that the seller must have full rights to sell the property listed on the bill of sale form; otherwise, there could be serious legal repercussions for the seller. Hence, it is advisable for the buyer to request that the seller produce documentation showing that he or she has full ownership rights to the item(s) being sold. If this documentation cannot be produced upon request, the buyer should be hesitant to sign a bill of sale.
A Bill of Sale is used to protect both the seller and the purchaser in the case of any future issues. Since many purchases and sales between individuals are transacted using cash, it can be hard to prove that an item was received or paid for without proper documentation.