Consignment refers to a commercial arrangement where goods are placed in the possession of a consignee, typically a retailer, who agrees to sell them on behalf of the consignor, the owner of the goods. The consignor retains ownership of the goods until they are sold, at which point the consignee remits payment to the consignor, minus an agreed-upon commission or fee. This arrangement allows the consignor to reach a wider market without bearing the risks and costs associated with traditional sales channels. Consignment agreements often specify terms regarding pricing, payment, storage, and the duration of the consignment period.
An arrangement under which items are delivered by a consignor to a consignee to be resold or used and paid for by the consignee.
n. the act of consigning goods to one who will sell them for the owner or transport them for the owner.
A consignment is a legal arrangement where one party (the consignor) transfers goods or products to another party (the consignee) for the purpose of selling them on behalf of the consignor. The consignee is responsible for storing, displaying, and selling the goods, and they only receive payment for the goods once they are sold. The consignor retains ownership of the goods until they are sold, and if the goods are not sold within a specified period, they may be returned to the consignor. This arrangement is typically governed by a consignment agreement that outlines the terms and conditions of the consignment, including the commission or fee that the consignee will receive upon the sale of the goods.
A consignment is a business arrangement where a person (consignor) entrusts their goods to another person (consignee) to sell on their behalf. The consignor retains ownership of the goods until they are sold.
While a written agreement is not legally required for consignment, it is highly recommended. A written agreement helps establish the terms and conditions of the consignment arrangement, including the commission rate, duration, and responsibilities of both parties.
The consignor is responsible for providing the consignee with the goods to be sold, ensuring they are in good condition, and setting a reasonable selling price. The consignor may also be responsible for any transportation or insurance costs associated with the consignment.
The consignee is responsible for displaying and promoting the consigned goods, finding potential buyers, negotiating sales, and collecting payment. The consignee must also keep accurate records of sales and provide regular reports and payments to the consignor.
The consignee is typically compensated through a commission, which is a percentage of the sale price. The commission rate is usually agreed upon in advance and stated in the consignment agreement.
The consignor generally bears the risk of loss or damage to the consigned goods until they are sold. However, the consignee may be liable if they fail to exercise reasonable care in protecting the goods. It is advisable to include provisions in the consignment agreement regarding liability and insurance coverage.
The consignee is obligated to return any unsold goods to the consignor upon request, unless otherwise specified in the consignment agreement. If the consignee refuses to return the goods, the consignor may have legal remedies available, such as filing a lawsuit for conversion or breach of contract.
The sales tax treatment of consigned goods varies by jurisdiction. In some cases, the consignee may be responsible for collecting and remitting sales tax on behalf of the consignor. It is important to consult with a tax professional or review local tax laws to ensure compliance.
Consignment can be used for a wide range of goods, including clothing, artwork, furniture, electronics, and more. However, certain goods may be subject to specific regulations or licencing requirements, so it is important to research and comply with any applicable laws before entering into a consignment agreement.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 10th April, 2024.
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