Consignment Agreement Template

A consignment agreement template is a contract between a consignee and consignor for the storage, transfer, sale or resale and use of the commodity. According to the agreement, the consignor retains ownership of the goods until they are sold, but the current possession of these commodities will remain with the consignee in order to sell them. The consignee will get his or her commission, either a fixed or variable percentage from the sale of commodities. Similarly, the consignee will return the commodities to the consignor if not sold within a given time. The consignment agreement clearly states the terms following which the consignee will sell certain or specific commodities, products or inventories followed by an agreed percentage of sale as commission. As far as the purpose of this agreement is concerned, it allows a consignee to sell consigner’s goods without paying indirect expenses, like transportation costs, storage and packing costs. This way, both the consignee and the consigner benefit from this transaction.

How a Consignment Agreement Works?

To sell commodities at a certain percentage of the sale, a consignee needs legal protection which only a consignment agreement can provide. Similarly, the consigner will also look for protection for his or her commodities, no matter whether they are sold or not. Well, a store owner who runs a store, can get its inventory by entering into agreement with individual people or parties. Although these parties are known as consignors who wish to sell their commodities or products. If an individual is manufacturing garments or trading them, he or she will need different resources to sell these commodities. To do so, the consignor will need to sign an agreement with nearby stores or sellers. This way, the consignor can easily sell his or her commodities with the help of consignees. It is pertinent to understand that the consignee will sell out the commodities on behalf of the consignor. Moving further, a consignment agreement is known by its other names. For instance, consignment shop agreement, consignment inventory agreement, and consignment commission agreement.

Importance of Consignment Agreement:

In a consignment agreement, the store owner and the owner of the products or commodities come together to sell a certain commodity. This agreement elaborates its terms specifically, which can guide its users to act upon without any confusion. One party will sell the products in exchange for a commission, while the other party will get its profit. As far as the profit portion is concerned, the store owner will get a small amount as proceeds from the sale, but the rest of the money will go to the pocket of the original owner. Beyond any hesitations, a comprehensive consignment agreement will actually provide an easy way to simply understand the legal statements of sale. In addition, this agreement always serves as a legally enforceable contract between the store owner and the commodity’ owner. Furthermore, the content of a consignment agreement includes several crucial elements. For instance, it explains the deal in clear words, remedies for unsold items, policies of the seller, sale price of the items, set of percentage margin on sale, payment options, responsibility of broken and damaged items, delivery statements, contract timeline and warranty claim for goods.