A consignment contract is an agreement made between a consignee and consignor. The consignee agrees to store, transfer, or sell a particular item that belongs to the consignor. The consignee is an agent who works to sell goods to a third party on behalf of the consignor. The typical consignment contract will include some type of sale or service fee paid to the consignee while the rest of the profits will go to the original party.
A consignment contract should be formatted similar to any legal contract. The contract should include the information for both parties, including contact information. Specific information about the goods should also be included, such as where the commodities will be stored, the sales price, what to do with the unsold goods, and what the consignee's fee is for each item. Any other detail about the consignment sale and the consignee desires should be included within the contract.
The consignment contract serves to protect both parties throughout the transactions, which may be ongoing. A good consignment agreement will also cover what to do if something goes wrong, such as a dispute resolution plan and the applicable law. The contract should contain information about insurance coverage and which party carries the risk of loss.
A Consignment Contract can be filled out by either the consignor or the consignee. Consignment agreement templates are available online for simplicity.
The Consignment Contract must contain important identifying information, including whether the parties are individuals or businesses and the parties’ contact information. The person who fills out the form must include the details of the agreement between the parties. Specifically, the contract should include details about payment and what happens if the consignee does not fulfill their duties.
The Consignment Contract should outline all of the parties expectations for their working relationship. It should be created, printed, and signed by both parties before the work begins. A copy of the agreement should be kept by each party.
In the United States, Consignment Contracts are governed by Article 9 of the Uniform Commercial Code (UCC). Consignment agreements are also subject to the governing law of the state that is specified within the agreement.