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A horse bill of sale is a document detailing the purchase of a horse between a buyer and seller, including the purchase price and signatures from both parties. This finalized document records the transfer of ownership. The video provides essential information about horse bill of sale forms and where to access a free official template. It emphasizes the importance of following best practices when buying a horse, which is a significant responsibility. Key steps include finding a seller with a suitable horse, setting a budget that factors in space, food, and care, and testing the horse through personal handling before negotiating the purchase.