A consignment agreement is used when someone what to sell something on behalf of another person. The document allows one party known as the consignor to grant another party known as the consignee the rights to sell merchandise that is owned by the consignor. This written legal agreement is beneficial when specifying how the sale of merchandise should work. Use this type of agreement if you’re in the business of selling items for other people or if you’d like someone to sell something for you on your behalf.
How it Works
The consignment agreement itself will outline various details such as the deadline for selling items, what happens if no sale occurs and the commission rate in question. The consignee typically collects the sales price of the merchandise and keeps a percentage as the commission. The balance is then paid to the consignor. The consignment agreement is simple and flexible written document that can accommodate unusual circumstances if applicable.
This written document may also be accomplished by a consignment agreement. Typically it is agreed upon that goods are stored at the distributor’s or a third party and remains the property of the consignor until payment is made from the consignee.
A consignment agreement is also known as a consignment inventory agreement, a consignment contract and a consignment sales agreement.