Consignment Agreement

A Consignment Agreement is a legally binding contract that sets the terms of sale, resale, transfer, or storage of a particular commodity.

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Selling goods for someone else and making money on commission is quite a popular business model, from the physical retail world to the digital space. 

It’s a great way to test new products on the market, mitigate marketing costs, and allow everyone to focus on their area of expertise.

For instance, manufacturers can keep creating stock while experienced sellers handle the sales and marketing aspects. But entering this type of agreement can create problems if the details are fuzzy or the obligations aren’t enforceable in court. This is where the Consignment Agreement comes in.

What Is a Consignment Agreement?

The Consignment Agreement isn’t mandatory, but it is a recommended contract. Its purpose is to set the terms for the storage, sale, resale, or transfer of various goods between the consignor and consignee.

In general, it outlines the responsibilities and obligations of the consignee towards the consignor and vice versa. Simultaneously, it also clarifies the commissions the consignee is entitled to after selling the goods, and any penalties if they fail to hold up their end of the agreement.

Other Names for Consignment Agreement

Depending on your state, a Consignment Agreement may also be known as:

  • Consignment Form
  • Consignment Contract
  • Consignment Agreement Form
  • Agreement to Consign Goods
  • Agreement to Sell Goods on Consignment
  • Consignment Letter

Who Needs a Consignment Agreement?

A reseller of goods is a perfect example of someone who needs a Consignment Agreement. It protects the reseller or consignee from not being awarded their commissions.

Consignors or wholesalers also benefit from a consignment agreement. This is because the contract sets clear obligations and liabilities for any reseller who sells their goods.

The Consignment Agreement can be enforced when either party has treated the other unfairly and outside the scope of the contract.

Why Use 360 Legal Forms for Your Consignment Agreement

Customized for you, by you

Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your Consignment Agreement.

Specific to Your Jurisdiction

Laws vary by location. Each document on 360 Legal Forms is customized for your state.

Fast and easy

All you need to do is fill out a simple questionnaire, print it, and sign. No printer? No worries. You and other parties can even sign online.

How to Create a Consignment Agreement With 360 Legal Forms

Creating a Consignment Agreement on your own can be a daunting task, even if you have some legal background. Each contract can have highly situational terms and legal jargon that’s difficult to understand. Using a specialized service is ideal to ensure the best protection and limited liability for both parties involved.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Consignment Agreement?

To create your Consignment Agreement, please provide:

    • The Start Date: Indicates the time when the Consignment Agreement goes into effect.
    • Consignor Information: Name and address of the consignor.
    • Consignee: Name and address of the consignee.
    • Consigned Goods: Mention commodities or goods sold by the consignee on your behalf. Provide a very detailed list of product information, purchase dates, retail prices, etc.
    • Consignment Period: Set the initial length of the agreement and its termination date. Otherwise, the contract extends in the event the goods aren’t sold on time.
    • Consignee Obligations: Inform the consignee of all obligations to sell and promote the consigned goods and set additional expectations.
  • Commission Information: Detail the percentage or commission structure that benefits the consignee.
  • Recitals: State the purpose for entering the Consignment Agreement.
  • Delivery: Outline how the consignee receives the goods and the various risks involved.
  • Risk of Loss and Damage: List the consignee’s responsibilities after receiving possession of the consigned goods and any penalties they may incur from damaging or losing the consigned goods.
  • Returns: Set the terms that allow you to ask for the return of your goods, a price for early returns, and the length for which this agreement will be valid.
  • Termination Clause: This informs both parties of the conditions they can use to terminate the agreement early and any penalties involved.
  • Warranties: Informs of any warranties.
  • Governing Law: Explain which state or county laws govern the Consignment Agreement.
  • Assignment Clause: State whether you approve or disapprove of you and the consignee transferring your responsibilities without mutual consent.
  • Notices: Indicate where to send further legal correspondence

Every Consignment Agreement will be unique to its scope, industry, length, and parties involved. Additional information may be necessary on a per case basis.

Consignment Agreement Terms

  • Consignor: The entity that ships goods to a consignee to resell or distribute while maintaining ownership of the goods until sold.
  • Consignee: The person or company allowed to use commodities from the consignment stock as indicated by the Consignment Agreement.
  • Consignment Stock: Also known as consignment inventory, it is the stock held by the consignee for redistribution, with the consignor’s accord.
  • Consignment Period: The length of time you allow a consignee to sell, store, and transfer goods on your behalf.

Consignment Agreement Signing Requirements

To be enforceable, a Consignment Agreement must be signed by both the consignor and consignee. Depending on the terms, this can be done via electronic signatures. However, witnessing and notarizing the contract is an optional step. Doing so will make challenging the validity of the signature very difficult but not necessary to legally enforce the terms of the contract.

What to Do With Your Consignment Agreement

With 360 Legal Forms, you can receive your customized Consignment Agreement in any format. It’s always best to review such a contract before signing it and ensure you understand the terms.

We recommend signing two copies, so both the consignor and consignee have one. Furthermore, creating digital and physical copies is a good idea. You can store them in different locations to avoid losing the contract.

Frequently Asked Questions

In most cases, the Consignment Agreements refer to three types of commissions: ordinary, del-credere, and over-riding. Each type refers to a specific commission structure agreed upon by the consignor and consignee. Ordinary commissions are paid when the consignee makes a sale. A del-credere commission is an additional bonus the consignee can receive on top of sales for making credit sales. The over-riding commission can be earned if the consignee is allowed to sell at a higher retail price.

A consignment agreement can be one of two types: exclusive and non-exclusive. It’s up to the parties involved to decide how they want to draft the terms. Non-exclusive Consignment Agreements are still enforceable and may lead the consignor to make higher profits due to more consignees selling the same item.

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Applicable to all 50 states
Applicable to all 50 states

Our documents are vetted by lawyers and are applicable to all 50 states.