A Consignment is the process of giving to another person the custody or care of any product or material goods that you are selling but still retaining legal ownership of those products until they are sold. The person who sends out the product or the goods is called a consignor while the agent who is entrusted with the product or the goods is known as a consignee.
A Consignment Agreement is a written agreement wherein the consignor requests a consignee to display goods at a certain store or premises of the consignee but still remains to be the consignor’s property. Consignment Agreements provide the same purpose as with other types of Agreement Forms – they provide security and protection for all parties involved in the agreement.
Vehicle Consignment Agreement Form
Standard Consignment Agreement Form
Furniture Consignment Agreement Form
Free Sales Consignment Agreement Form
Consignment Inventory Agreement Form
Why Consignment Agreements Matter
Consignment Agreements are important when entering into a consignment because they guarantee the full ownership of the exporter or the consignor and do not oblige the distributor to pay for the items until they are sold – which gives him the opportunity to improve his cash flow.
Consignment Agreements have to be carefully drafted to leave no room for doubt with other third parties in times when a bankruptcy is filed.
Point of Interest
In a Consignment Agreement, the point of interest for the distributor or the consignee is to increase the amount of the product’s stock because it makes no effect on his cash situation. Prices of the stock of goods are usually lower than that of the retail price. Both parties will agree on a reasonable flow of stock depending on the demand and will consider as to how quickly the exporter or the consignor can produce or deliver the goods to avoid a disruption in the supply of stocks.
Consignment Agreement Form in PDF
Consignment Shop Contract Form
Clothing Consignment Agreement Form
Simple Consignment Agreement Form
So what exactly should be covered in the Consignment Agreement?
The Consignment Agreement should indicate the store’s contact information on the first page of the contract. This may also be one using the store’s letterhead or it may be inserted into the first portion of the contract. The agreement should also indicate the consignor’s name and contact details such as his phone number and e-mail address.
The next important clause of a Consignment Agreement are the details pertaining to the merchandise being delivered for consignment. The contract should indicate the types and condition of the merchandise that are deemed acceptable and should also include the right of the consignee or his personnel to refuse merchandise that does not meet the store’s standards.
Terms and Conditions
The next crucial detail that should be specified in a Consignment Agreement is the consignment’s period length. This aspect usually depends on the location of the store and the climate. An example would be clothing stores that move out specific seasonal wears after a span of 3 months.
In addition, some consignors or consignees may also want to whip up a Confidentiality Agreement apart from a Consignment Agreement to protect their business and their trade secrets when the sharing or the knowing of confidential and sensitive information pertaining to their business needs to be disclosed. Our Confidentiality Agreement Forms and Consignment Agreement Forms cover all the basic details there are to know about consigning. Download or print one now at the click of a button.
A Consignment Agreement should specify the percentage of each sale that is allocated to the consignor and the consignee. Options can range from an even split of 50 percent of the product’s sale, or a 60-40 split wherein 60 percent can either go to the consignor or the consignee, and the remaining 40 percent goes to the other party.
Disposing of Unsold Products
Finally, the last, most basic and important clause of a Consignment Agreement is the disposal of items which have not been sold. A specific date may be indicated in the contract wherein the consignor can then pick up the unsold items.
As with other Agreement Contracts, Consignment Agreements are a vital part of any understanding between a consignor and a consignee. Whipping up a contract that clearly expresses the terms and conditions of both parties can prevent misunderstandings and disputes down the road.
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