Consignment Agreement: Definition & Key Components

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What is a Consignment Agreement?

A consignment agreement is a legally binding document between a consignee and a consignor for the sale, storage, transfer, resale and use of a commodity. The consignee accepts goods from sellers to sell to potential buyers. The consignee will not receive commissions till the goods are sold. If the goods do not sell, they can be returned to the consignor.

You can read more on consignment here .

What is Consignment in Contract Law?

In contract law, consignment agreements contain language indicating that the retailer agrees to display the provided consigned items for a specific time period also known as the consignment period . The terms set out in the consignment agreement decide how the commodities will be marketed during the consignment period.

For each sale, the consignee will get commission and pay the agreed upon price to the consignor who provided the items for sale. The contract also determines how the unsold items will be returned or if the consignment period will be extended for those items.

You can read more on consignment agreements in contract law here .

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Key Components of a Consignment Agreement

There are key components of a consignment agreement:

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How Consignment Agreements Work

Consignment agreements allow a consignee to sell goods on behalf of a consignor without having to purchase the goods. The consignee earns commission on the consigned goods sold.

A consignment arrangement allows outlets to sell goods without having to invest in purchasing them. Often luxury goods are in demand in the resale market and owners of vintage luxury goods can choose to consign their luxury items.

Consignment stores provide marketing and sale of these goods without bearing much risk as they do not need to purchase the good for advertising and selling it. Consignment agreements clearly lay out responsibilities and obligations of the consignor and consignee involved in the sale of the property.

Consignment agreements can be of two types:

  1. Exclusive : In an exclusive consignment agreement, only the consignee has the right to sell the consignor’s item.
  2. Non-exclusive : In a non-exclusive consignment agreement, multiple consignees can attempt to sell the same item.

Here is more on how consignment agreements work .

Get Help with a Consignment Agreement

Do you have any questions about a consignment agreement and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from business lawyers who specialize in consignment agreements.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.