Selling your car or bike?

What this document contains

11 clauses every vehicle sale agreement carries, plus 2 you can add.

1. 01

   Introduction

   The preamble: date and place, the Seller and Buyer with the recital wording their entityType selects, and the recitals stating that this is a sale of the described motor vehicle on the recorded terms.

2. 02

   The Vehicle

   The particulars that identify the vehicle being sold — make, model, year, registration, chassis and engine numbers, and the odometer reading — as stated in the Certificate of Registration.

3. 03

   Sale and Consideration

   The agreement to sell and the price: the total consideration, and whether it is paid in full on delivery or as an advance with the balance on delivery. The balance is computed from the two amounts, so it can never contradict them.

4. 04

   Delivery and Handover

   When and where the Vehicle changes hands, the documents and items handed over with it, and the point at which property in the Vehicle passes to the Buyer — delivery against payment in full.

5. 05

   Risk and Liability After Delivery

   The cut-off this instrument exists for: from delivery, the Vehicle is at the Buyer's risk and every fine, e-challan, tax and third-party liability arising from its use is the Buyer's — whatever name the RC still shows — with mirrored indemnities either side of the moment of delivery.

6. 06

   Transfer of Registration and Insurance

   The statutory steps that move the RC and the policy: Forms 29 and 30 signed at delivery, the Buyer's application for transfer within 30 days, the Seller's intimation within 14 days (45 where the Buyer is in another State) under Section 50, Motor Vehicles Act 1988, and what happens to the insurance — transfer to the Buyer within 14 days under Section 157, or the Seller cancels and the Buyer insures afresh from delivery.

7. 07

   Seller's Representations and Warranties

   What the Seller stands behind: sole ownership and the right to sell, freedom from encumbrances (with a carve-out for a disclosed hypothecation being closed under this Agreement), taxes and challans discharged to delivery, no theft report or proceeding known, genuine documents, and a genuine odometer reading.

8. 08

   Condition of the Vehicle

   The as-is-where-is bargain: the Buyer has inspected and test-driven the Vehicle and takes it in its present condition, with fair wear and tear not a defect — subject to a list of disclosed defects when there is one, and never excusing fraud.

9. 09

   Default and Remedies

   What happens when a side does not perform: the Seller may end the sale and retain actual loss out of the advance if the balance is not paid; the Buyer may end it and recover the advance if the Vehicle is not delivered; and either side can recover the cost of the other's failure to complete the registration steps.

10. 10

    Governing Law and Dispute Resolution

    Applicable law, jurisdiction, and dispute resolution mechanism (courts or arbitration under Indian law).

11. 11

    General Provisions

    The closing machinery: entire agreement, written amendments, notices, severability, no waiver by indulgence, counterparts, who bears the stamp duty, and the relationship of the parties confined to seller and buyer.

Optional clauses

• Hypothecation

  For a vehicle whose RC still carries the financier's endorsement: the Seller closes the loan, obtains the financier's no-objection certificate and Form 35, and has the endorsement terminated under Section 51 of the Motor Vehicles Act, 1988, at the Seller's cost — before delivery, or out of the Sale Price as the Parties agree in writing.

  Worth adding when: The RC shows a hypothecation, or the vehicle loan is not yet closed — the endorsement must be terminated for the transfer of registration to go through

• Custom Clause

  A free-form clause for bespoke provisions not covered by standard clauses. Use clauseId 'custom-clause-1', 'custom-clause-2', etc. to add multiple.

What the law requires

The registered owner stays liable until the RC moves

Under Section 2(30) of the Motor Vehicles Act 1988 the person in whose name the vehicle stands registered is its 'owner', and the Supreme Court holds that person answerable to third parties even after a private sale (Naveen Kumar v Vijay Kumar). The agreement therefore fixes an express liability cut-off at delivery with mirrored indemnities, and binds both parties to the statutory transfer steps — never suggest the paper alone ends the seller's exposure; completing the RC transfer does.

Section 2(30), Motor Vehicles Act 1988; Naveen Kumar v Vijay Kumar (2018) 3 SCC 1

Transfer timelines are statutory, not contractual

Section 50 of the Motor Vehicles Act 1988 and Rule 55 of the Central Motor Vehicles Rules 1989 set the choreography: the transferee applies for transfer within 30 days with Forms 29 and 30, the transferor reports the transfer within 14 days (45 days where the transferee is in another State). The clause recites these timelines as obligations between the parties; do not shorten or extend them by drafting.

Section 50, Motor Vehicles Act 1988; Rule 55 and Forms 29/30, Central Motor Vehicles Rules 1989

Insurance follows the vehicle for third parties only

Section 157 deems the certificate of insurance transferred with the vehicle, but for third-party risks; the transferee must apply to the insurer within 14 days for the policy to be transferred in full, and own-damage cover does not follow automatically. Where the parties choose cancellation instead, the buyer must hold fresh insurance from delivery — a vehicle may not be used on a public road without cover.

Sections 146 and 157, Motor Vehicles Act 1988

A vehicle is goods; property passes as the parties intend

A registered motor vehicle is movable property, and under Sections 19–20 of the Sale of Goods Act 1930 property passes when the parties intend it to pass. State the moment expressly — this agreement fixes it at delivery against payment in full — so that risk, the liability cut-off and the seller's lien all hang off one identifiable event.

Sections 4, 19, 20 and 33, Sale of Goods Act 1930

A hypothecation on the RC blocks the transfer

An endorsement of hypothecation under Section 51 travels with the registration, and the registering authority will not complete a transfer while it subsists. The closure path is the financier's no-objection certificate and Form 35, then termination of the endorsement. Where the loan is closed out of the sale price, protect the buyer with the right to pay the financier directly in discharge of the seller's obligation.

Section 51, Motor Vehicles Act 1988; Form 35, Central Motor Vehicles Rules 1989