Free Consignment Agreement Template
A consignment agreement clearly defines the terms between a consignor and consignee regarding the sale of goods. It’s an essential document for both parties, and having a robust consignment agreement template is critical to moving through your operations efficiently.
What is a Consignment Agreement?
A consignment agreement is a legally binding contract between a consignor, or owner of the merchandise, and a consignee who sells the merchandise on behalf of the consignor. It allows the consignor to ship items for the consignee to trade in their retail location without purchasing the inventory upfront.
The agreement outlines crucial details, including:
- A description of the items on consignment
- The split of revenue from sales
- Timeframe for sale of goods
- Who is responsible for aspects like shipping, insurance, theft, damage
- Reasons for terminating the contract
In short, this critical legal document protects both the owner of the merchandise and the retailer selling it by clearly spelling out each party’s rights and responsibilities. For example, it gives the consignor confidence they will receive agreed-upon payment when items sell.
When to Use a Consignment Agreement Template
A consignment agreement template is crucial when a consignor plans to ship merchandise to a retailer for sale without the store purchasing the inventory.
For example, a fashion designer ready to get their clothes into boutiques would require consignment agreements before sending their newest line. An artist who crafts décor items to display in home goods stores also needs these contracts.
If a creator sends products to shops without selling the items to the stores outright, clear consignment terms must be set. This legally binding document protects both parties by spelling out revenue splits, timelines, return policies, and more critical details.
Specific examples that call for an official consignment contract include:
- An artist consigning their paintings to be displayed and sold in a gallery
- A jewelry designer shipping their pieces to high-end boutiques to sell
- A furniture maker consigning handcrafted goods to home décor retailers
- A vintage clothes reseller providing a boutique inventory of curated fashions
- A photographer consigning limited edition prints to interior design showrooms
No matter what merchandise is involved or what type of retailer ultimately lists the items for sale, consignment agreements become essential. They provide creators confidence in the process while giving shops legal protection, too.
At the end of this article, you’ll find a free consignment agreement template to simplify the process so you can easily customize terms.
What is an Example of a Consignment Payment?
A typical consignment agreement splits the revenue from sales between the consignor, or owner of the merchandise, and the consignee, the retailer selling the products. The specifics vary, but a typical arrangement is a 60/40 split in favor of the consignor.
For example, designer Paula partners with a boutique called Fashion House to sell her new clothing line on consignment. The entire agreement outlines that Paula will receive 60% of the total sales, and Fashion House will take 40%.
When one of Paula’s $100 dresses sells, Fashion House pays Paula $60 as her cut. So, for every item sold, Paula multiplies the selling price by 60% to calculate her consignment payment.
This revenue split compensates the designer for creating the items while incentivizing the boutique to promote sales volume to maximize its 40% commission per sale. Tracking inventory and corresponding payments is essential.
The example terms can be customized in a consignment agreement template. Key details like revenue split percentages and payment timelines should be outlined upfront before selling goods on consignment in retail stores.
What a Consignment Agreement Template Should Include
A consignment agreement template covers crucial details about the arrangement, including:
Party Information
Clearly identifying the consignor or owner of the merchandise and the consignee or retailer helps ensure legal obligations are fully understood. Details like full business names, addresses, and points of contact should be included upfront. Having this specified background procedural information aids dispute resolution.
Description of Goods
An itemized list describing the merchandise headed to the consignee’s store for sale is vital. All products sent on consignment should be cataloged by quantity, item numbers, sizes/dimensions, colors, and other identifiers. Photos can supplement the detailed descriptions. Complete transparency on inventory being consigned allows proper tracking and payment reconciliation when goods sell.
Right to Sell
The template should grant the retailer or consignee authorization to sell the listed consignment goods in their store during the specified consignment period. Explicitly stating this “right to sell” consent helps avoid disputes. Outlining intended sales channels also provides helpful directionality.
Minimum Price
To protect the consignor’s sales revenue, a minimum retail price for merchandise may be set, preventing goods from being discounted too heavily. Specifying floor prices for specific products or categories gives the consignor more control. Price limits motivate the most lucrative sales approach.
Consignment Fee & Payment Terms
The consignment fee percentage owed to each party and corresponding payment terms must be established upfront. The date the consignee must pay the consignor after a sale could be monthly, quarterly, etc. Defining these compensation specifics eliminates payment delay tactics down the road.
Item Location
Detailing the consignee’s business name and address where consigned merchandise will be located reassures the owner. It also specifies where unsold items must be returned at the end. Pinpointing display and storage expectations provides procedural direction.
Time Frame
The consignment period, with clear start and end dates, must be defined upfront. This gives both parties expectations for the merchandise turnover timeframe and return of any unsold items. Standard periods range from 30-90 days. Reasonable notice policies and durations motivate active promotion and sales.
Insurance
To protect against loss due to damage, theft, etc., the agreement states who is responsible for maintaining insurance coverage on consigned goods. Often, the consignor/owner takes this on. However, deciding on insurance accountability shields against assumption gaps, leaving products at risk if incidents were to occur.
Modification & Termination
The template should outline how any changes can be made to the existing agreement terms. Reasons for early contract termination from one or both parties also need to be addressed. This prevents misunderstandings later. For example, language can specify that termination requests must be made in writing within XX days of signing by either the consignor or retailer. Modification procedures should also be formally submitted.
General Terms
This covers any additional legal clauses not already outlined regarding disputes, confidentiality, severability, releases, waivers, disclaimers, etc. Defaulting to applicable laws in the absence of specified terms is also typically included. Critical areas like mediation guidance, confidentiality standards, and liability limitations should be pre-defined to streamline resolution processes if issues emerge.
Signatures
Signed consent demonstrating the consignor/owner and consignee/retailer agree to all outlined terms and conditions is critical. Electronic signatures via Signaturely provide efficient, legal e-signature workflows.
Explicitly detailing obligations and securing sign-off from both parties in this comprehensive document protects consignment arrangements, preventing misunderstandings before selling goods.
Download our free example
Consignment Agreement Template
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Benefits of a Consignment Agreement
Having an explicit consignment agreement in place offers advantages, including:
Outlines obligations – Defines responsibilities of consignor and consignee regarding inventory, payment, timeline, insurance, etc.
- Protects merchandise: Consignor maintains ownership until items sell. Details like where goods will be stored reassure them.
- Prevents misunderstandings: Formal agreements leave no question on terms like revenue splits, discounts, and more.
- Saves upfront costs: Consignor avoids purchasing inventory themselves, hoping it will sell. Only pay for produced items that move.
- Provides flexibility: Consignment periods allow testing merchandise without long-term commitments. Terms can evolve.
- Limits liability: For example, if items get damaged, a consignment agreement states who handles insurance claims.
In the event of a dispute, having this legally binding document ensures consensus on expectations and handles arbitration. It’s a failsafe for consignors and consignees alike.
Specific advantages that a precise consignment contract offers include:
- Consignors avoid upfront inventory production costs since items only get created once retail demand is validated through initial sales. This saves significantly on wasted upfront expenditure.
- Creators receive payment faster since contract terms mandate consignee payout deadlines aligned with in-store sales activity rather than waiting for a product to be ordered.
- Display locations become low-risk “testing grounds” for new product launches since short consignment periods limit commitment. Merchandise can easily rotate out based on performance.
- Loss prevention accountability gets firmly established regarding who handles aspects like item storage standards, security, damage during shipment, insurance claims if theft occurs, etc.
Confusion gets avoided on sales commission revenue splits thanks to clearly articulated percentages within the agreements. Renegotiation proves more straightforward as well if terms require adjustment.
Bottom line: consignment contracts ultimately provide win-win relationships for retailers and product creators when done correctly. Merchandise gets displayed for sale, store revenue increases from new inventory, and designers/artists receive payment for goods that successfully move.
How Do You Write a Consignment Agreement? Use Signaturely
Creating a customized consignment agreement template to meet your specific needs can be challenging. Signaturely’s free online tool makes it fast and easy.
With Signaturely, both parties can collaboratively build out contract details like:
- Consignment merchandise details
- Revenue split percentages
- Payment timelines
- Inventory tracking
- Liability clauses
- And more
Once the agreement terms are defined, Signaturely facilitates the e-signature process to get a legally binding sign-off in minutes without any paperwork. Data encryption and secure document storage are even provided automatically.
See the consignment agreement template below to execute your consignment strategy. Build, e-sign, and manage yours with ease using Signaturely.
FAQs About Consignment Agreement Templates
Some common questions around these contracts include:
What is a typical consignment agreement?
A consignment agreement defines the relationship between a consignor/owner of goods and a consignee/retailer selling them. It covers details like revenue splits, timelines, insurance, reporting, and more. Standard sections include inventory tracking, sales parameters, logistics handling, and dispute controls.
Who is the consignee in a consignment agreement?
The consignee is the party selling the merchandise on behalf of the consignor— typically a boutique, gallery, or other store interested in increased inventory without sizable upfront costs. The consignee primarily provides retail space and sales labor.
What are the key terms of a consignment agreement?
Key terms include consigned inventory details, authorized pricing, consignment fees, payment processes & timing, insurance requirements, length of agreement, and reasons for early termination. Clearly aligned expectations on these core areas pave the way for transparency.
What is the disadvantage of a consignment agreement?
The main drawback is that the consignor gives up control and ownership until the merchandise sells. Protecting goods via insurance, etc., is critical. However, reputable consignees take product safeguarding seriously, knowing relationships depend on it.
Who provides the consignment agreement?
While any lawyer can create one, Signaturely offers a free customizable online consignment agreement template builder to simplify creating and e-signing this contract. Their templates, combined with seamless workflows, accelerate rollout.
Who owns inventory on consignment?
The consignor maintains ownership over all consigned merchandise until the items sell through the consignee’s retail location per the agreement. The transfer and corresponding revenue splits occur upon the final consumer purchase.
What You Need to Remember About a Consignment Agreement Template
A consignment agreement creates clarity for retailers and creators. It’s essential to outline merchandise logistics, authorized sales parameters, revenue splits, insurance, timeframes, and dispute guidance upfront.
This contract protects consignors with ownership retention while minimizing consignee risk exposure from upfront inventory costs. Well-crafted agreements motivate sales activity, streamline payment flows, and strengthen relationships through transparency on obligations. Consign wisely by investing in the right Signaturely templates to guide you through the process.
Consignment Agreement
CONSIGNMENT CONTRACTUAL AGREEMENT
PARTIES
- This Consignment Agreement (hereinafter referred to as the “Agreement”) is entered into on ________________ (the “Effective Date”), by and between ________________________, with an address of ________________ (hereinafter referred to as the “Consignor”) and ________________ with an address of ________________ (hereinafter referred to as the “Consignee”) (collectively referred to as the “Parties”).
EFFECTIVE DATE CLAUSE
- This Consignment Agreement (hereinafter referred to as the “Agreement”) shall become effective as of [insert Effective Date], and shall remain in full force and effect until terminated in accordance with the provisions herein. All obligations, rights, and responsibilities of the Parties under this Agreement shall commence as of the Effective Date, unless otherwise specified herein.
CONSIGNMENT GOODS
- The Consignor agrees to consign the following goods (“Consigned Goods”) to the Consignee for the duration of this Agreement: [describe the consigned goods in detail, including quantity, description, model numbers, serial numbers (if applicable), and any other relevant identifying information]. The Consignor warrants that they have full legal ownership of the Consigned Goods and have the right to consign them to the Consignee. The Consignee agrees to accept the Consigned Goods on consignment and to exercise reasonable care in storing, displaying, and selling them in accordance with the terms of this Agreement.
TITLE AND OWNERSHIP
- Title and ownership of the Consigned Goods shall remain with the Consignor throughout the duration of this Agreement. The Consignee acknowledges that they hold the Consigned Goods solely as bailee for the Consignor and that no transfer of ownership occurs upon delivery of the Consigned Goods to the Consignee. The Consignee agrees not to claim any right, title, or interest in the Consigned Goods, except as expressly provided for in this Agreement. In the event of loss, damage, or destruction of the Consigned Goods while in the possession of the Consignee, the Consignor shall retain ownership, and the Consignee shall promptly notify the Consignor and take all necessary steps to protect the Consignor’s interests.
LOCATION OF GOODS
- The Consignee shall store and display the Consigned Goods at [insert location or locations agreed upon by both Parties]. The Consignee shall ensure that the storage and display location(s) are suitable for the safekeeping and presentation of the Consigned Goods and comply with all applicable laws, regulations, and industry standards. The Consignor reserves the right to inspect the storage and display location(s) of the Consigned Goods upon reasonable notice to the Consignee. The Consignee shall bear all costs associated with the storage and maintenance of the Consigned Goods at the agreed-upon location(s).
CONSIGNMENT PERIOD
- The consignment period shall commence on the Effective Date of this Agreement and shall continue until [insert end date], unless terminated earlier in accordance with the provisions herein. The Consignor and Consignee may mutually agree to extend the consignment period in writing. Upon the expiration of the consignment period or termination of this Agreement, the Consignee shall return any unsold Consigned Goods to the Consignor in accordance with the terms herein.
PRICING AND PAYMENT
- The pricing of the Consigned Goods shall be determined by the Consignor and communicated to the Consignee in writing prior to the commencement of the consignment period. The Consignee agrees to sell the Consigned Goods at the prices specified by the Consignor and shall not alter the pricing without prior written consent from the Consignor. Upon the sale of Consigned Goods, the Consignee shall remit payment to the Consignor within [insert timeframe, e.g., 7 days] of the sale, less any agreed-upon commissions or fees. The Consignor shall provide the Consignee with regular reports detailing the sales of Consigned Goods and the corresponding payments made to the Consignor. Any taxes, duties, or other charges associated with the sale of Consigned Goods shall be the responsibility of the Consignor, unless otherwise agreed upon in writing.
CONDITION OF GOODS
- The Consignor warrants that the Consigned Goods are in good condition, free from defects, and suitable for sale. The Consignee agrees to inspect the Consigned Goods upon receipt and notify the Consignor promptly of any damage, defects, or discrepancies. The Consignee shall exercise reasonable care in storing, handling, and displaying the Consigned Goods to maintain their condition. The Consignee shall not alter, modify, or repair the Consigned Goods without prior written consent from the Consignor. In the event of loss, damage, or theft of the Consigned Goods while in the possession of the Consignee, the Consignee shall promptly notify the Consignor and take all necessary steps to protect the Consignor’s interests.
SALES AND REPORTING
- The Consignee agrees to maintain accurate records of all sales transactions involving the Consigned Goods and provide regular reports to the Consignor detailing the sales activity. These reports shall include, but not be limited to, the date of sale, description of the Consigned Goods sold, quantity sold, sale price, and any applicable fees or commissions deducted. The Consignee shall provide these reports to the Consignor on a [insert frequency, e.g., monthly] basis or as otherwise agreed upon by both Parties. Additionally, the Consignee shall remit payment to the Consignor within [insert timeframe, e.g., 7 days] of the sale, accompanied by a copy of the corresponding sales report. Both Parties agree to maintain open communication and transparency regarding sales activity to ensure the successful management of the consignment arrangement.
TERMINATION AND RETURN OF GOODS
- Either Party may terminate this Agreement upon [insert notice period, e.g., 30 days] written notice to the other Party for any reason or no reason at all. Upon termination of this Agreement, the Consignee shall promptly return any unsold Consigned Goods to the Consignor in the same condition as received, normal wear and tear excepted. The Consignee shall bear all costs associated with the return of the Consigned Goods, including packaging and shipping expenses. The Consignor agrees to reimburse the Consignee for any prepaid commissions, fees, or expenses related to the sale of Consigned Goods that have not yet been remitted to the Consignor at the time of termination. Upon receipt of the returned Consigned Goods, the Consignor shall inspect them and notify the Consignee of any discrepancies or damages. Both Parties agree to cooperate in good faith to facilitate the smooth and orderly termination of this Agreement and the return of the Consigned Goods.
FORCE MAJEURE
- The Parties shall be liable for any failure or delay in performing their obligations under this Agreement due to circumstances beyond their reasonable control, including but not limited to acts of God, war, terrorism, government actions, natural disasters, or epidemics. If a Force Majeure Event occurs, the affected Party shall promptly notify the other Party and make reasonable efforts to mitigate the impact. The affected Party’s obligations shall be suspended during the Force Majeure Event, and the time for performance shall be extended accordingly. If the Force Majeure Event continues for [insert duration], either Party may terminate this Agreement upon written notice to the other Party.
RENEWAL OF AGREEMENT
- The Parties agree that this Agreement, prior to its termination, is subject to renewal provided that both parties submit a signed addendum agreeing to the renewal.
AMENDMENTS
- The Parties agree that any amendments made to this Agreement must be in writing where they must be signed by both Parties to this Agreement.
- As such, any amendments made by the Parties will be applied to this Agreement.
SEVERABILITY
- In an event where any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then the remaining provisions will remain to be enforced in accordance with the Parties’ intention.
DISPUTE RESOLUTION
- Any dispute or difference whatsoever arising out of or in connection with this Agreement shall be submitted to [insert means] (Arbitration/mediation/negotiation) in accordance with, and subject to the laws of [insert applicable law].
GOVERNING LAW
- This Agreement shall be governed by and construed in accordance with the laws of [insert applicable law].
SIGNATURE AND DATE
- The Parties hereby agree to the terms and conditions set forth in this Agreement and such is demonstrated throughout their signatures below:
CONSIGNOR |
CONSIGNEE _______________________________ |
DATE
_______________________________
|
DATE
_______________________________ |
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