A consignment agreement template is a legal document that outlines the terms and conditions of a consignment arrangement between two parties. This type of agreement is typically used in retail businesses, where one party (the consignor) agrees to allow another party (the consignee) to sell its products in their store. There are many different elements that can be included in a consignment agreement template, depending on the needs of the parties involved. In this article, we will discuss the different types of consignment agreements, as well as some key elements that should be included in each one. We will also provide a sample consignment agreement for you to use as a reference.
What is a Consignment Agreement and Why Do You Need One
A consignment agreement is a contract between two parties, the consignor and the consignee. The consignor agrees to sell their goods or products to the consignee, who will then sell them to customers. The agreement sets out the terms of the arrangement, including how much commission the consignee will earn on each sale.
There are several reasons why you might need a consignment agreement template. Firstly, it provides clarity for both parties as to their respective roles and responsibilities. Secondly, it helps to protect both parties in case of any disputes that may arise. And thirdly, it can help to ensure that both parties receive their fair share of any profits generated from sales of the goods or products.
Pros and Cons of Using a Consignment Agreement Template
There are both pros and cons to using a consignment agreement.
|The Pros:||The Cons:|
|A consignment agreement can provide clarity for both parties as to their respective roles and responsibilities.||A consignment agreement can be complex and time-consuming to draft, especially if you are not familiar with the legal jargon used.|
|A consignment agreement can help to protect both parties in case of any disputes that may arise.||If either party breaches the terms of the agreement, it can be difficult and expensive to enforce.|
|A consignment agreement can help to ensure that both parties receive their fair share of any profits generated from sales of the goods or products.||There is always a risk that the other party will not hold up their end of the bargain, which could leave you out of pocket.|
The Different Types of Consignment Agreements
There are two main types of consignment agreements: an exclusive consignment agreement, and a non-exclusive consignment agreement. Under an exclusive arrangement, the seller agrees to sell the goods only through the consignee. A non-exclusive arrangement allows the seller to also sell the goods through other channels, such as their own website or brick-and-mortar store.
The main difference between these two types of agreements is that an exclusive arrangement gives the consignee more control over how and where the goods are sold. It also typically results in a higher commission rate for the consignee, as they are taking on more risk by agreeing to sell only those goods.
Key Elements of a Consignment Agreement Template
There are a few key elements that should be included in any consignment agreement template, regardless of whether it is exclusive or non-exclusive.
- First, the agreement should spell out exactly what goods are being sold on consignment. This might include a description of the items, as well as their quantity.
- Second, the agreement should state the commission rate that will be paid to the consignee. This is typically a percentage of the sales price, but could also be a flat fee per item sold.
- Third, the agreement should specify how and when payment will be made to the consignee. This might be monthly, upon sale of each item, or at some other interval.
- Fourth, the agreement should identify the parties involved. This will include the name and contact information of both the consignor and consignee.
- Fifth, the agreement should establish the terms of the consignment arrangement. This might include how long the goods will be kept on consignment, where they will be displayed or sold, and what happens if they are not sold within a certain time frame.
- Sixth, the agreement should set forth any restrictions on the use or sale of the goods. For example, there might be a restriction on selling the goods below a certain price point.
- Finally, the agreement should contain a disclaimer of warranties and liability. This protects both parties from any legal responsibility in the event that something goes wrong with the goods.
How to Create a Consignment Agreement
Now that you understand what goes into a consignment agreement, you might be wondering how to create one. The good news is that there are a variety of templates available online.
When choosing a template, be sure to select one that is appropriate for your jurisdiction and business type. In other words, don’t use a generic template if you live in the United States – choose one that’s specifically designed for businesses in your state. Likewise, don’t use a template intended for retail businesses if you run an online store.
Once you’ve found a suitable template, simply follow the instructions to fill it out. Most templates will be in PDF or Word format, which makes them easy to edit.
Be sure to include all of the essential elements in your agreement, such as:
- The names and contact information of both parties
- A description of the goods being sold
- The terms of sale, including price and payment methods
- The consignment period (the length of time the goods will be on display)
- The commission rate (the percentage of each sale that will be paid to the consignee)
- Any other relevant details, such as return policy or liability waiver
Sample Consignment Agreement Template
This sample consignment agreement template can be used by any store or seller who wants to consign goods. To use this template, simply fill in the information below and send it to the potential consignee.
Consignor Information Name: _____________________________________________________________ Address: ___________________________________________________________ Phone Number: _____________________________________________________ Email Address: ____________________________________________________ Consignee Information Name: _____________________________________________________________ Address: ___________________________________________________________ Phone Number: _____________________________________________________ Email Address: ____________________________________________________ This Consignment Agreement (the “Agreement”) states the terms and conditions that govern the contractual agreement by and between: CONSIGNOR: [insert name/entity name], located at address: [insert address] and CONSIGNEE: [insert name/entity name], located at address: [insert address], Hereinafter referred to collectively as “PARTIES” and individually as “PARTY”, RECITALS WHEREAS the Consignor owns the right and title to the items described in Article 1 of this Agreement (the “Consigned Items”), and the Consignee desires to take possession of the Consigned Items with the intention of selling them to a third party. NOW, THEREFORE, in consideration of the mutual promises and covenants as hereinafter set forth, and intending to be legally bound hereby, the Consignor and the Consignee hereby agree as follows: Subject Matter. 1.1. The Consignor hereby grants to the Consignee the exclusive right to display and sell the Consigned Items according to the terms and conditions of this Agreement. The Consigned Items are as follows: [Item 1 and description] [Item 2 and description] [Item 3 and description] Price. 2.1. The minimum price at which the Consignee may sell the Consigned Items shall be [Specify the minimum amount] (the “Minimum Price”). In the event the Consignee sells the Consigned Items for less than the Minimum Price, the Consignor shall be entitled to the same payment the Consignor would receive as its share of the sale price under this Agreement, had the Consigned Items been sold for the Minimum Amount. Consignment Fee 3.1. The Consignee shall be entitled to a percentage of the full purchase price of the Consigned Items (the “Consignment Fee”). 3.2. Within [Specify the number] of days from the sale of the Consigned Items, the Consignee shall deliver to the Consignor the sale price of the Consigned Items less the Consignment Fee. 4. Insurance 4.1. The Consignee represents and warrants that the Consignee shall maintain insurance coverage sufficient to compensate the Consignor for the fair market value of the Consigned Items in the event of damage due to fire, theft, or otherwise. 5. Location of Items 5.1. The Consignee agrees and acknowledges that the Consigned Items shall only be kept and stored at [Specify address] unless otherwise agreed upon by the Consignor in writing. 6. Timeframe 6.1. In the event that all the Consigned Items are not sold by [Specify Date], all unsold Consigned Items shall be returned to the Consignor with all delivery costs borne by the Consignee. 7. Consignor Representations and Warranties 7.1. The Consignor hereby represents and warrants that the Consignor holds full title (or has received, in writing, the authorization to sell the Consigned Items by any necessary parties) to the Consigned Items. 8. Expenses 8.1. The Consignee shall bear all expenses for shipping the Consigned Items. 9. Amendments 9.1. This Agreement may not be modified, amended, altered, or supplemented except by an agreement in writing executed by the parties hereto. 10. Applicable laws 10.1. This Agreement and the interpretation of its terms shall be governed by and construed in accordance with the laws of the State of [Specify State] and subject to the exclusive jurisdiction of the federal and state courts located in [Specify country], [Specify state]. 11. Entire Agreement 11.1. This Agreement supersedes all previous agreements, understandings, and arrangements between the parties, whether oral or written and constitutes the entire agreement between the parties. 12. Waivers 12.1. The waiver by either party of a breach or other violation of any provision of this Agreement shall not operate as, or be construed to be, a waiver of any subsequent breach of the same or other provision of this Agreement. 13. Notice. 13.1. Unless otherwise provided herein, any notice, demand, or communication required, permitted, or desired to be given hereunder shall be in writing and shall be delivered by hand, by telex or telecopy, by facsimile, or by registered or prepaid certified mail through the United States postal service, return receipt requested, addressed as follows: [Specify sender’s address] or to such other address, and to the attention of such other persons or officers as either party may designate in writing. Any notice so addressed and mailed shall be deemed duly given three (3) days after deposit in the United States mail, and if delivered by hand, shall be deemed given when delivered, and if telecopied, telexed, or sent by facsimile, shall be deemed given on the first business day immediately following transmittal. 14. Counterparts. 14.1. This Agreement may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same Agreement. 15. Articles and Other Headings. 15.1. The articles and other headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of the terms of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first set forth above. 16. SIGNATURE’S OF THE PARTIES CONSIGNOR’s Signature: ______________________________ Date: ___________ Print Name: ______________________________ CONSIGNEE's Signature: ______________________________ Date: ___________ Print Name: ______________________________