Consignment Agreement

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.

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.