This consignment agreement is between
The Seller is engaged in the sale of
The Consignor has created and owns certain products, described in greater detail in Exhibit A (collectively, the "Products") and wants to sell those Products.
The Consignor desires that the Products to be sold on consignment by the Seller, and the Seller wishes to sell those Products on behalf of the Consignor.
The parties therefore agree as follows:
1. INITIAL CONSIGNED PRODUCTS.
On
2. DELIVERY OF PRODUCTS.
The Seller will accept the Products from the Consignor on a consignment basis only. The Consignor is solely responsible for the cost of delivering the Products to the Seller. All risk of loss or damage to the Products while those Products are in transit remains with the Consignor.
3. TERM; TERMINATION.
- (a) Consignment Period. For each Product, a consignment period begins when the Consignor receives that Product and ends
calendar days later (the "Consignment Period"). The Seller may dispose of any Products left on the Seller's premises after their Consignment Periods at its discretion. Any proceeds generated from the sale of these Products after the end of its Consignment Period will be the sole property of the Seller, and the Consignor will receive no commission under section 6 for any such sale. - (b) Termination. Either party may terminate this agreement at any time, for any reason. Termination is effective
days after either party serves written notice on the other party at that party's notice address listed in section 16 17 below. - (c) Effect of Termination. Within
days of the date of the termination notice, the Seller shall return all Products to the Consignor.
4. SELLER BUSINESS OPERATIONS.
- (a) Display; Pricing. The Seller shall display the Products in a prominent place in the Seller's establishment, and make every effort to sell the Products at or above the initial retail prices listed on Exhibit A (the "Retail Prices"). The Seller shall inform the Consignor of bona fide offers to purchase the Products for prices less than the Retail Price.
The Seller shall obtain the express written consent of the Consignor before offering the Products for sale at less than their respective Retail Prices. The Seller reserves the exclusive right to accept a price less than the Retail Price for each Product. - (b) General Operations. The Seller shall have the exclusive right to determine the business operations and management of its premises.
5. TITLE TO PRODUCTS.
Title to and ownership in the Products remains with the Consignor until the Products are sold in the regular course of business, or used or purchased by the Seller.
6. COMMISSION; PAYMENT.
- (a) Commission. The Seller shall provide to the Consignor a
monthly weekly statement listing all sales made of Products, including the dates of those sales and the total amounts received. The Seller will receive% of the Retail Price of that Product , excluding tax (the "Commission"). The Commission is the Seller's sole compensation under this agreement. - (b) Payment.
Within days after the sale of any Product At the end of each month , the Seller shall pay the Consignor the Retail Price less the Commission on each Product Sale. A "Product Sale" has occurred if before the end of its Consignment Period a Product is:- (i) sold by the Seller;
- (ii) removed, withdrawn, lost, or stolen from the Seller's stock on hand;
- (iii) damaged or destroyed while in the Seller's possession; or
- (iv) otherwise not physically present in the Seller's stock on hand.
7. RISK OF LOSS; DAMAGE.
All risk of loss or damage of the Products will pass to the Seller when the Products are in the Seller's physical possession. The Seller shall insure the Products against all risks against which such goods are customarily insured, including insurance for theft and damage, and provide evidence of that insurance coverage to the Consignor as and when requested. If the Products are damaged or lost while in the Seller's physical possession, a Product Sale will be deemed to have occurred and the Seller shall reimburse the Consignor the amount of the damaged or lost Products' respective Retail Prices, less the Seller's Commission.
8. RETURN OF PRODUCTS.
- (a) Consignor Request. At any time, and from time to time, the Consignor may request the return of all or some of the Products by providing
days' written notice. - (b) Seller Request.
At any time during a Consignment Period, the Seller may require the immediate removal of all or some of the Products, with reasonable written notice to the Consignor. All costs of removing the Products will be borne by the . If the Consignor does not remove the designated Products within days of its receipt of the Seller's written notice requesting that removal, the Seller may deem these Products abandoned and obtain full title to these abandoned Products with no further conditions. The Seller may thereafter dispose of the abandoned Products in its sole discretion. If the Seller does not request removal of all of the Products in its possession, those Products remaining in the Seller's stock on hand will be deemed sold to the Seller pursuant to a Product Sale, and the Seller shall remit payment to the Consignor according to the terms of section 6.
The Seller offers no warranties on the sale of any Product, except if a warranty is required by law and cannot be disclaimed.
The Consignor represents to the Seller that:
- (a) it has good and marketable title to the Products;
- (b) none of the Products are subject to liens or other encumbrances;
- (c) none of the Products are in violation of any trademark, copyright, or other proprietary right of any third party, state or federal law, or administrative regulation.
The Consignor shall indemnify the Seller from all damages, suits, litigation, awards, and costs, including attorneys' fees, that may arise out of the display or sale of the Products for any reason, including civil or criminal suits over authenticity, legality, ownership, infringement of copyright or trademark, or any other claim or litigation.
- (a) Choice of Law. The laws of the state of
govern this note (without giving effect to its conflicts of law principles). - (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in
County, .
No amendment to this agreement will be effective unless it is in writing and signed by a party.
- (a) No Assignment. Neither party may assign any of its rights under this agreement, except with the prior written consent of the other party. All voluntary assignments of rights are limited by this subsection.
- (b) No Delegation. Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.
- (c) Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made in violation of this section, it is void.
- (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
- (b) Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.
If any one or more of the provisions contained in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this agreement to be unreasonable.
- (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
- (b) Addresses. A party shall address notices under this section to a party at the following addresses:
- If to the Consignor:
- If to the Seller:
- (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.
This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.
Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this agreement on the date stated opposite that party's signature.
Date: _________________ |
By:__________________________________________ |
| Name: |
|
Date:_________________ |
By:__________________________________________ |
| Name: |
[PAGE BREAK HERE]
| EXHIBIT A |
| add border | ||
|---|---|---|
| Description of Goods # | No. of Units | Initial Retail Price |
How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.
Consignment agreement: How-to guide
Businesses choose consignment arrangements for many reasons. Retail stores may want to test marketplace demand for a new product. Those stores can sell goods on consignment without investing initial capital in purchasing them outright: the store will remit payment only when the consigned items are sold.
A confident manufacturer (or artist or other “creator”) may be willing to take that risk, secure that its goods will sell themselves. It can shore up that risk as well, requiring in its consignment agreement that the retail store invest significant marketing dollars in promoting the goods.
Although a consignment arrangement may be profitable for both retailer and creator in the long run, it is essential that, at the outset, each party signs and maintains paperwork sufficient to protect and satisfy its individual interests.
Things you need to follow in your consignment arrangements
1. Have a thorough understanding of the product
Have an in-depth discussion about the products to be consigned. What makes them unique? What makes them attractive to purchasers? Who is the audience for these products? The more information the parties share, the greater the opportunities for marketing and sales.
2. Clarify the terms and conditions of the consignment contract
Before writing your agreement, decide what your goals are. A good legal contract is one that captures the intentions of the parties accurately. Take a moment to clarify the terms and conditions of the agreement before memorializing them in written form. If any provision of your agreement is confusing, try to make it clearer. A few hours spent improving your agreement now could prevent weeks of future headaches.
3. Provide enough time to review the entire agreement
Allow each party to spend some time reviewing the agreement. This will prevent the parties involved from claiming that they didn’t understand the terms of the agreement.
4. Include all relevant deal points
In your consignment agreement, you must ensure you’ve included all the deal points clearly and precisely.
5. Sign the consignment contract before consigned goods are sold
A contract should be signed before services are performed, goods are exchanged, or money is transferred.
6. Keep copies of the signed contract
Sign two copies of the agreement, one for you and one for the other party.
7. Decide whether the consignment agreement should be signed before the notary
Depending on the nature of its terms, you may decide to have your agreement witnessed or notarized. This will limit later challenges to the validity of a party’s signature.
8. Retain essential documents
Careful record-keeping is essential to the consignment relationship. The manufacturer or creator should prepare and present an inventory sheet with each delivery and keep this sheet up to date with payment summaries and count totals. Good recordkeeping can limit later disagreements or lawsuits.
9. Seek legal help in case of doubts
If your deal or agreement is complicated, it is good to contact an attorney to help you draft a contract that'll meet your specific needs.
Important components of a consignment agreement
The following instructions will help you understand the terms of your consignment agreement.
1. Introduction of parties
Identifies the parties involved in the consignment agreement and the date when the agreement will be signed. In the agreement, the party that is providing the property or product is called the “consignor.” The party that is selling the property is called the “consignee.”
2. Recitals
This section explains why the parties wish to sign the consignment agreement.
3. Consigned property
This part describes the property that'll be sold by the consignee on behalf of the consignor and how many units of each item will be provided. Use as much detail as possible, including (if available) factory codes, serial numbers, model and style numbers, etc. You and the other party should also agree on an initial retail price for each listed item and the date on which those goods will be delivered.
4. Delivery of goods
It explains that the consigned items are being provided on a consignment basis only and that the consignor bears both the cost of delivering the products and the risk of any loss or damage occurring during that transport.
5. Consignment period
This clause provides information regarding the time period. Most commonly, the initial length of the consignment period is one month. This period automatically extends from month to month afterward unless either party ends it. You and the other party can enter a maximum amount of time a consignment period can be extended.
6. Efforts to sell
It’s one thing for a retailer to allow items to sit in its store. It’s another for that retailer to promote the sale of those items by giving them proper positioning and attention. This section provides that the consignee’s obligations go beyond simply keeping the products in its store: it must also make reasonable efforts to sell the property at the price agreed upon.
7. Title to products
A consignment arrangement differs from most relationships between manufacturers and stores selling on their behalf.
In the usual case, property ownership is transferred to the store when the property is received: they have paid to purchase it, which is part of the company’s assets. By contrast, the property transferred in a consignment agreement is still owned by the manufacturer, even though it is in the hands of the store.
This paragraph emphasizes again that the parties to the agreement are entering into a consignment arrangement.
8. Payment terms and commission
In this section, you and the other party can decide what percentage of the sale will be kept as the consignee’s fee for its services. You can also determine whether unsold goods should be returned. If yes, provide the time period the consignee has to return the property after the agreement ends.
9. No assignment
This segment states whether the consignee has to remit the remaining proceeds within a certain number of days or whether monthly payments would be preferable for your arrangement.
10. Risk of loss and damage
If any property is lost or damaged, the person in possession of it should pay for that loss.
11. Return of products
This allows the consignor to request a return of the products when a reasonable notice period is provided. The two parties can determine how long this period should be. In addition, after the end of the consignment term, the consignee can demand that the consignor retrieve its products. The parties can determine that time frame as well.
12. Additional terms
This optional provision can include any additional terms that haven't already been listed. For example, if the parties exchange confidential information, you may want to include a provision governing the protection of that information. Alternatively, you and the other party may want to provide that if and when products are sold, replacement products will be provided to the consignee by the consignor within a certain amount of time.
13. Termination
Explains that either party can end the agreement anytime for any reason. If the parties decide to end the agreement, this paragraph indicates when and how any unsold products should be dealt with. According to this clause, either party can transfer its obligations under the agreement without the prior written consent of the other party.
14. Notices
Lists the addresses to which all official or legal correspondence will be delivered.
15. Default
It is an optional provision that can be used to provide additional security to the consignor. Essentially, this section indicates that if the consignor requests that the consignee file papers swearing officially that the products are owned by the consignor, the consignee is obligated to do so.
16. No product warranties
Indicates that there are no warranties on the consigned products, except to the extent required by law.
17. Consignor’s representations, warranties, and indemnification
This section indicates that the consignor owns the consigned products and that no other person or company is interested in the product. It also states that the consignor will be responsible for the cost of defending this title.
18. Governing law and equitable relief
Allows the parties to choose the state and county laws that’ll be used to interpret the agreement. Note that this isn’t a venue provision: the included language won’t impact where a potential claim can be brought.
The provision also allows the parties to seek equitable relief (i.e., court remedies requiring a party to perform or refrain from performing certain acts) for any agreement violation.
19. Entire agreement
The parties’ agreement that the document they’re signing is “the agreement” about the issues involved. In other words, if previous agreements or promises surface, only the signed document remains valid. Unfortunately, the inclusion of this provision won't prevent a party from arguing that other enforceable promises exist, but it'll provide you some protection from these claims.
20. No implied waiver
This part explains that if either party ignores or allows the other to break an obligation under the agreement, it doesn't mean that the party waives its future rights to enforce the same (or other) obligations.
21. Severability
Protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting choice-of-law clauses, it won't undo the entire agreement. Instead, only the section dealing with the choice of law would be invalidated, leaving the remainder of the agreement enforceable.
22. Counterparts; electronic signatures
The title of this provision sounds complicated, but it is simple to explain. It says that even if the parties sign the agreement in different locations, or use electronic devices to transmit signatures (e.g., fax machines or computers), all of the separate pieces will be considered part of the same agreement. In a modern world where signing parties aren't often in the same city—much less the same room—this provision ensures that business can be transacted efficiently without sacrificing the validity of the agreement as a whole.
23. Headings
This segment states that the headings at the beginning of each section are meant to organize the document and shouldn't be considered operational parts of the agreement.
How does a consignment agreement template help?
A well-drafted consignment agreement provides for some form of inventory control and a clear allocation of the rights and responsibilities of each party. A written agreement minimizes confusion, misunderstanding, and error and clearly sets forth the parties’ expectations and fulfillment obligations.
Having a consignment agreement template helps create a comprehensive agreement. An agreement template, along with including essential points, will keep a check on applicable laws and regulations, insurance coverage for consigned items, exclusive rights that the parties agree to, and other payment terms. LegalZoom’s consignment agreement template provides you with the foundation to create your agreement with ease.
Once an agreement is drafted, necessary parties can easily sign the document with the help of LegalZoom’s eSignature service. Once signed, each party will be able to focus on its area of expertise: the retailer on selling and the manufacturer on creating. In every way, this promotes a successful division of labor and a profitable long-term business arrangement.
Frequently asked questions
What's a consignment agreement?
A consignment agreement, otherwise called a consignment contract, allows someone to sell goods through a party who'll collect a fee or a percentage once the goods are sold. The responsibilities of the two parties regarding the storage, display, sale, or delivery of the goods and other factors can vary according to the agreed terms. Hence, a consignment agreement is essential to ensure both parties understand the terms when one sells on behalf of the other.
What key details are required to complete a consignment contract?
Here's the information you'll need to have handy to complete your consignment agreement:
- Who it's coming from: Determine if a business or individual is sending the consignment agreement and have the name and contact information ready
- Who it's going to: Know who this document is going to and have the individual or business name and contact information ready
- Subject matter: Have the details of the types of goods that'll be sold
- Dates: Be clear about the agreement's timeline, including the start date
Free Consignment Agreement Template
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