Purpose.

Bulk Sales Act is designed to

prevent the defrauding of creditors by the
secret sale in bulk of substantially all of a
merchant's stock of goods.
(b) General scheme The general scheme
of these statutes is to declare such bulk
sales fraudulent and void as to creditors of
the vendor, or presumptively so, unless
specified formalities are observed, such as
the demanding and the giving of a list of
creditors, the giving of actual or
constructive notice to such creditors, by
record or otherwise, and the making of an
inventory.
 What shall be deemed to be a sale and
transfer in bulk. A sale and transfer in bulk
is any sale, transfer, mortgage or assignment
(1) of a stock of goods, wares, merchandise,
provisions, or materials otherwise than in the
ordinary course of trade and the regular
prosecution of the business of the vendor,
mortgagor, transferor, or assignor, or
(2) of all, or substantially all, of the business or
trade theretofore conducted by the vendor,
mortgagor, transferor, or assignor, or
(3) of all, or substantially all, of the fixtures and
equipment used in and about the business of
the vendor, mortgagor, transferor, or assignor.
(Sec. 2, Bulk Sales Law.)
 Term "stock, " explained. The common
use of the term "stock" when applied to
the goods in a mercantile house refers to
those which are kept for sale. (Albrecht
v. Cudihee, 37 Wash. 206, 208, 79 P. 628.)
 Term "merchandise," explained. We
think that "merchandise," as used in this
act, must be construed to mean such
things as are usually bought and sold in
trade by merchants. "Merchandise" means
something that is sold every day, and is
constantly going out of the store and being
replaced by other goodsThus,
"merchandise" may include a stock of
meat and other merchandise such as is
usually sold in a market or liquors kept in a
saloon for sale but land and buildings are
not "goods, wares, and merchandise"
within the statute
 Term "fixtures," explained. When used in
statutes of this character, it refers to such
articles of merchandise usually possessed
and annexed to the premises occupied by
them to enable them better to store, handle,
and display their wares and which are
commonly known as trade fixtures, although
removable without material injury to the
premises at or before the end of tenancy. But
a store building containing a stock of
merchandise and being used for transactions
of mercantile business is not a fixture. The
statute has reference to trade fixtures
connected with the business and not to the
building in which the business is carried on
 It will not be deemed a sale and transfer
in bulk in contemplation of this Act,
(1) if such vendor, mortgagor, transferor,
or assignor produces and delivers a
written waiver of the provisions of this Act
from his creditors as shown by verified
statements (Sec. 2, Bulk Sales Law), or
(2) if such vendor, mortgagor, transferor,
or assignor is an executor, administrator,
receiver assignee in insolvency, or
public officer, acting under judicial
process. (Sec. 8, Bulk Sales Law.)
 Only creditors at the time of the sale in
violation of the law are within the
protection of the laws and creditors
subsequent to the sale are not covered.
 PHILIPPINE ISLANDS ) S.S.
PROVINCE OR CITY OF )
Before me, the undersigned authority, personally appeared
_________ (vendor, mortgagor, agent or representative, as the
case may be), bearing Res. Cert. No. _____________ issued at
_________ on the __________ day of ___________, who, by me being
first duly sworn, upon his oath, deposes and states that the
foregoing statement contains the names of all the creditors of
______________ (vendor, mortgagor) together with their addresses,
and that the amount set opposite each of said respective names,
is the amount now due and owing, and which shall become due
and owing by _____________ (vendor or mortgagor) to such
creditors, and that there are no creditors holding claims due or
which shall become due, for, or on account of goods, wares,
merchandise, provisions or materials purchased upon credit or on
account of money borrowed, to carry on the business of which
said goods, wares, merchandise, provisions of materials are a
part, other than as set forth in said statement.
_______________________
(Signature of vendor, etc.)
Subscribed and sworn to before me this ___________ day of
__________, 19____, at ____________
 Sufficiency of statement. Substantial . A verbal statement
that the seller had no creditors is not sufficient compliance
with a statute requiring the statement to be in writing and
under oath. If the seller has no creditors, an unequivocal
statement of this fact is necessary in the statement. An
affidavit stating that a stock sold is "entirely free from debt
and that there is no encumbrance thereon, except a certain
chattel mortgage given to" a specified person is insufficient
as against existing creditors of the seller. (Interstate Shirt,
etc. Co. v. Windham, supra.)

The statute contemplates not only creditors whose claims

are due but those whose claims are not due and the
statement must state the facts as to both class of creditors if
both exist and if there are none such, the latter fact must be
stated. The statement is ineffectual if it fails to give the
addresses of the creditors. If the statement is defective on its
face, the buyer accepts it at his peril.
 Effect of false statement. If the statement is
fair upon its face and the buyer has no
knowledge of its incorrectness, and nothing to
put him on inquiry about it, he will be protected
in his purchase. If the seller misrepresents the
amount of his indebtedness, the creditor has no
remedy against the goods sold, but he can
prosecute the seller criminally. The statute
declares the sale void only on the failure of the
purchaser to do what is required of him. It does
not declare the sale void if the list of creditors
furnished by a vendor under oath is not in fact
"full, accurate and complete." It does not in
any way make the purchaser responsible for
any incorrectness in the list. We think it would
be unreasonable to so construe it.
 Even if the transaction falls within the
definition of bulk sale, the following are
not deemed covered by the law:
a. If the vendor, mortgagor, transferor or
assignor produces and delivers a written
waiver of the provisions of the law from his
creditors as shown by verified statements;
b. The law does not apply to executors,
administrators, receivers, assignees in
insolvency, or public officers, acting under
process.
 Obligations when transaction is a bulk sale:
a. The vendor must deliver to such vendee a
written statement of:
names and addresses of all creditors to
whom said vendor or mortgagor may be
indebted;
amount of indebtedness due or owing to
each of said creditors
PENALTY:
When not complied with, the sale itself is void;
the seller will be criminally liable.
 b. The vendor must apply the
purchase money to the pro-rata
payment of bona fide claims of the
creditors as shown in the verified
statement.

PENALTY:
When above is not complied with, the
sale itself is also void; seller is also
criminally liable.
 C. The seller, at least 10 days before the
sale, shall:
make a full detailed inventory of the
goods, merchandise, etc., cost price of
each article to be included in the sale
notify every creditor at least 10 days
before transferring possession of the
goods, of the price, terms and conditions
of the sale
PENALTY:
When is not complied with, the sale is
not void; no criminal liability on the
seller.
 Constitutionality of the Law. The Bulk Sales
Law is constitutional. (Liwanag v. Menghraj, 40
Off. Gaz. 1441.) Bulk sales statutes have been
sustained as a constitutional exercise of the
police power, and as such not in violation of
the constitution prohibiting the enactment of
laws which shall deprive any person of life,
liberty, or property without due process of law,
or which shall deny to such person the equal
protection of the laws. Nor do they infringe
constitutional provisions guaranteeing the right
of acquiring, possessing, and protecting
property. (27 C.J. Sec. 882.)
 PEOPLE V WONG SZU TUNG (1954) The
object of the sale a foundry shop is not
covered by the provisions of the Bulk sales
law. What was sold was the shop itself,
together with the goodwill and credits,
equipment, tools and machinery thereof
(including a Dodge truck), which are not
the stock of merchandise, goods, wares,
provisions or materials in bulk referred to in
the law. A foundry shop manufactures iron
works or processes or casts metals. It does
not sell merchandise.