A contract between a supplier and a consignee for the sale or resale of goods to customers.
A Consignment Agreement sets out the terms on which a supplier (the Consignor) agrees to provide goods to another business (the Consignee) for the purposes of selling those goods. Under a Consignment Agreement, the Consignor (the supplier) will retain all ownership over the goods being provided until the Consignee sells them to customers. This means that the Consignor can demand their goods to be returned to them at any point during the commercial relationship.
Generally, under a Consignment Agreement, a Consignee will act as an Agent and may get a commission or fee for the goods they sell on behalf of the Consignor.
A Consignment Agreement will clearly outline the roles and responsibilities of both parties, minimising the risk of disputes. This agreement covers a wide range of clauses, including:
- details of the consigned goods, the procedure for managing delivery and stock and what happens if any product is defective;
- outlining the fees and payment protections;
- clarifying the company’s obligation to sell the products and promote the interest of the consignor in good faith when marketing and promoting the products;
- stating the events under which title and ownership of the products will pass;
- the return of products not sold; and
- termination of the agreement.
If you’re looking for a company to sell your products to third parties or if you are a company looking to sell products belonging to third parties, getting a well-drafted Consignment Agreement is a great place to start to ensure that you have covered all angles.
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