A simple consignment agreement template is a self-help contract drafting tool that memorializes the promises made between a consignor and consignee. The legally binding sample consignment contract includes comprehensive terms and conditions and important language for commission rates, consignment period, marketing responsibilities, inventory control, and property return process.
Lawrina designed this template exclusively for businesses to save the time, money, and effort of drafting their consignment agreements from scratch.
Our standard consignment agreement template outlines how a business entity will receive, store, market, ship, and return another party’s goods. Sellers receive a commission for their work and pay residuals to commodity owners after deducting their share. When the consignment period of the contract ends, the seller returns any unsold goods to the owner unless the terms of the retail consignment agreement provide for a contract extension or disposal of the owner’s property by other means.
A basic consignment contract template generally identifies two parties — the consignee and the consignor.
Consignment forms must use absolute terms to be enforceable in court. Those terms include the following:
Party introduction — Identify the “consignor” and “consignee,” their legal names, places of business, and contact information.
Preamble — Introduce the background facts, express the parties’ intent, and describe the purpose of the contract.
Consigned assets — Give a detailed inventory of the items to be sold (number of units, serial numbers, etc.) and include the assets’ insurable values. The language here memorializes which items the consignee will sell and their respective selling prices.
Delivery method — Outline the consignor’s duties for delivering the consigned property to the consignee. The consignment agreement template may also include terms describing the method of transportation, shipping costs, and insurance coverage. Here, the parties indicate who will pay for delivery costs and who will cover any loss or damage occurring during transport.
Consignment period — Specify how long the consignor’s property will remain in the consignee’s possession and note whether the consignment agreement will automatically extend until all items are sold.
Consignor duties — Describe the consignor’s obligations and fiduciary duties owed to the consignee.
Consignee duties — Memorialize the consignee’s storing, marketing, and selling responsibilities and any fiduciary duties owed to the consignor.
Ownership of goods — Declare that the consignor retains ownership of the consigned items until the consignee sells or returns them. As such, a free consignment agreement should ensure that the consignor holds proprietary rights throughout the consignment period.
Consignee commission and payment — Outline how much the consignee will receive in commission for each item sold. The consignment agreement template will also affirm the timing and method of payment, commission rate(s), payment terms, and legal consideration to the consignee.
Loss risk, damage, and indemnification — Explain the consignee’s responsibilities regarding lost or damaged property in the consignee’s possession and whether the consignee needs insurance to cover potential losses. The consignment agreement template may also include hold harmless and indemnification clauses to protect both parties from unforeseen liability.
Goods returned: Include language in the free consignment agreement describing how the consignee must return unsold goods to the consignor or return stored property after receiving reasonable notice. Also outline the timing and method of returns and who will pay for any transportation costs or delivery fees imposed.
Termination — Declare that either party can end the consignment agreement “at any time for any reason.” Also set forth the conditions and procedures for termination, including how unsold goods will be returned or disposed of and any liabilities or obligations that may remain after termination.
Rescind or default — Explain the liability and remedies available after a breach of the consignment agreement, non-performance, or default by either party. Also outline the consequences of such termination.
Waiver — Affirm that delays in a party’s enforcement of certain rights or remedies in the consignment agreement do not constitute a waiver of those rights.
Severability — Declare that, if one or more conditions is illegal or unenforceable, the remaining provisions of the consignment agreement will remain enforceable.
Governing laws — State which jurisdiction’s laws and regulations the court will use to interpret and enforce the terms of the signed free consignment agreement.
Suppose you want to sell commodities but don’t have the resources to maintain large inventories or market numerous products. In that case, examples of consignment agreement templates may be useful for you. A consignment agreement authorizes another business to stock and sell your goods in its store (e.g., Amazon Fulfillment Services).
Working on consignment benefits the consignee because the entity earns a commission on every sale without having to purchase goods. Similarly, consignors don’t need to invest in marketing to sell their products or bear the costs of storing inventory.
The consignment contract clearly lays out the responsibilities and obligations of each party, from purchasing inventory and selling the items to disposing or returning unsold items to the owner.
Our printable simple consignment agreement in PDF allows users to custom draft contracts to meet their business needs with any of the following types of consignment arrangements:
Outward consignment — Consignors send their items to consignees that do business in a different country.
Inward consignment — Consignees sell items domestically from another country.
Exclusive consignment — Consignees hold exclusive rights to sell the consignor’s items.
Non-exclusive consignment — Consignors hold the right to sell their items using multiple consignees.
Ordinary consignment — Consignees receive a fixed percentage of gross sales.
Del-crede consignment — Consignees receive additional commissions paid directly from the consignor to cover credit sales costs (i.e., bad debt and POS fees).
Comprehensive consignment — Consignees receive additional commissions from a sale that benefited from “extra” marketing efforts by the consignee.
Consignment formats must have the following elements for the signed contract to be enforceable:
Identification of the parties involved (consignor and consignee)
Description of the goods being consigned
Terms of the consignment, including the length of the agreement and the commission rate
Obligations of the consignor and consignee, such as delivery and storage of the goods
Payment terms and procedures for handling returns, unsold items, and other consignment legal issues
Liability and insurance provisions that identify the party responsible for remedying loss or damaged goods
Dispute resolution mechanisms and any applicable laws or regulations
Either consignors and consignees can access Lawrina’s consignment agreement template and learn how to write a consignment agreement. During the drafting process, both parties can discuss their business needs and agree on the key terms, consignment arrangements, and legal components mentioned above. The parties can then input this information into the template to satisfy the legal requisites for making the contract enforceable.
Afterward, the consignor and consignee can download a final draft in Word or PDF format for proper execution and endorsement. Consignors and consignees may also want to take note of the following tips before printing their contracts:
Make it state-specific. To protect the interests of businesses, every US state has adopted the Uniform Commercial Code (UCC) rules and guidelines on contracts. However, most states have unique admin codes regarding consignment sales. For this reason, draft your free consignment agreement according to the rules of your jurisdiction.
Businesses use consignment agreement templates to reduce inventory risk and free up cash flow while also increasing their product offerings and expanding their customer base through third-party sales.
The top five businesses that regularly use consignment agreement templates are:
Artists often use free consignment agreements to make arrangements to showcase their works. Galleries act as the consignee, and the artist as the consignor.
Clothing stores use consignment contracts when selling items from small fashion designers or local artisans.
Consignors receive no money while their merchandise sits on shelves in a consignee’s store. Therefore, if cash flow is tight or if you can’t wait extended periods to receive payments, a consignment agreement template may not work for your business. Consignment agreements may not be legal or ethical when selling dangerous commodities (e.g., firearms, toxic chemicals, or explosives). Additionally, when consignors and consignees have a history of mistrust or disputes, there may be better options than consignment between the parties, as it can lead to further conflicts.
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Consignment clauses are legal provisions in a contract that define the terms and conditions of a consignment agreement.
Consignment payment terms refer to the specific obligations and timeframes under which a consignor will receive payment for goods sold throughout a consignment period.
A typical and fair consignment split in the US is generally 60/40 or 60 percent to the consignor and 40 percent to the consignee.
The consignee is the one who accepts a consignor’s goods for selling to potential buyers in a physical or virtual store.
Yes, a free consignment agreement can be used to create a legally-binding contract that memorializes promises made between a consignor and a consignee.