A Consignment is the process of giving to another person the custody or care of any product or merchandise yet still retaining legal ownership of the merchandise until they are sold. The person who supplies the merchandise or the goods is referred to as the consignor and the person who is entrusted with the product or the goods for display is referred to as the consignee.
When a consignor requests a consignee to be given permission to display merchandise or products at a certain store or premise, A Consignment Agreement is needed in order to set proper expectations between both parties. A Consignment Agreement is a written agreement that establishes the terms set by both the consignor and the consignee to avoid misunderstandings.
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A Consignment Contract has to be carefully and thoroughly made and should contain the necessary information required in a Consignment Agreement. Our wide array of Contract Forms ranges from Consignment Agreement Forms to Construction Contract Forms to provide you with fast and easy access.
The Perks of Whipping Up a Consignment Contract
Consignment Contracts matter because they provide security between both the consignor and the consignee. Consignment Contracts establish a consignor’s entitlement to full ownership of the products until they are sold and do not obligate the consignee to pay for the supplies until they are paid for by a paying customer.
In a Consignment Agreement, the consignee aims to increase the amount of the product’s stock because it has 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 take into consideration how quickly the exporter or the consignor can produce or deliver the goods to avoid a disruption in the supply of stocks.
What to Include in Your Consignment Contract
The first page of a Consignment Agreement should include the contact details of the store where the merchandise is to be displayed, as well as the consignor’s name and contact information.
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The contract should indicate the types and condition of the merchandise and should also include the right of the consignee or its personnel to refuse a product that does not meet the store’s standards.
Terms and Conditions
You can include the length of time that the goods are to be displayed in this section of the contract. Duration of the consignment 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.
Indicating the payment terms of the deal means specifying the amount of profit divided between 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.
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