A Bona Fide Sale is a genuine transfer of ownership and risk of loss in the imported merchandise from seller to buyer, supported by mutual consideration. Without a bona fide sale, there is no "price actually paid or payable" and transaction value under 19 U.S.C. § 1401a(b) cannot apply.
The leading case is VWP of America, Inc. v. United States, 175 F.3d 1327 (Fed. Cir. 1999), which set out factors for evaluating whether a transaction is a bona fide sale:
- Transfer of title to the buyer
- Transfer of risk of loss to the buyer
- Whether the buyer paid for the merchandise (or is unconditionally obligated to)
- Whether the buyer assumes ownership-style activities — insurance, customs filing, inventory financing, resale rights
Consignment arrangements, intercompany "sales" without genuine transfer of risk, and tolling arrangements are common scenarios where there is no bona fide sale. In those cases, valuation falls to the fallback methods — typically deductive value or computed value.
Bona fide sale is particularly important in first sale for export transactions, where the importer needs to demonstrate two bona fide sales — factory-to-middleman and middleman-to-importer — and that the factory-to-middleman sale was clearly destined for export to the United States.
For related-party transactions, a bona fide sale exists if title, risk, and consideration genuinely move between the related entities. Mere paper transfers within a single consolidated entity are not bona fide sales.