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Consignment Agreement

Consignment Agreement

The Consignor and the Consignee may be referred to individually as "Party" and collectively as the "Parties."

This Consignment Agreement, hereinafter referred to as the "Agreement," is entered into and made valid upon signature by both Parties.

RECITALS:

WHEREAS, the Consignor wishes to sell a certain product or products, specifically the following, which shall hereinafter be referred to generally as the "Product" on consignment: [Insert full description of the product or products that are being offered for sale on consignment]

WHEREAS, the Consignee wishes to sell the Product on behalf of the Consignor, including accepting delivery of the Product and making proper payment to the Consignor once the sale of the Product is complete;

NOW, therefore, in consideration of the promises and covenants contained herein, as well as other good and valuable consideration, the Parties do hereby agree as follows:

DEFINITIONS: 

  1. Consignor: a person or company that consigns goods, merchandise, etc.
  2. Consignee: a person or party to whom something, usually merchandise, is consigned.

TITLE & CONSIGNMENT OF GOODS:

  1. The Consignor owns the Product. Under the terms and conditions of this Agreement, the Consignor grants the right to sell the Product to the Consignee. Title of the Product will remain with the Consignor until the Product is purchased.
  2. The Consignor grants this right exclusively.

AGREEMENT OF THE PARTIES:

The Consignor agrees to deliver the Product to the Consignee for sale on consignment. Delivery can be made in any manner agreed to by the Parties. The Consignee agrees to accept delivery of the Product and to devote its best efforts to the sale of the Product for the Consignor. The Consignee hereby acknowledges and agrees that it does not have any right, title, or interest in and to the Product and that the Product is not intended as a security of any kind.

FEES & PAYMENT:

The required payment ("Payment") for the Product shall be determined by the Consignor. The Payment Price required for the sale of the Product will be as follows: [Insert what will be the price for the product]

This Payment price may be subject to change, but may only be changed through a written, signed addendum to this Agreement.

After the Product is sold for the Payment Price, the Consignee will send the entirety of the income, minus a percentage of the sale/specific flat fee/any other arrangement, to the Consignor within [Insert number of days] days of sale. 

The Consignee shall keep accurate records of sales that the Consignor may inspect at any time upon reasonable notice.

CREDIT SALE:

The Consignor does not recommend a sale on credit term by the Consignee to any party. In such a case the Consignee provides such terms to third parties, the full purchase price shall be assumed by the Consignee upon period of payment as if the same was paid in full at the time of sale.

LOSS & DAMAGE:

The Consignee shall be liable for any loss or damage occurring to the Product if it is damaged before sale. The Consignee must maintain insurance in an amount equal to or greater than the replacement cost of the Product.

DELIVERY EXPENSES:

The Consignor/Consignee shall bear the cost of shipping expenses for the delivery of the Product.

EMPLOYMENT TAXES:

The Parties hereby acknowledge and agree that the Consignor has no responsibility or liability when it comes to the Consignee's employment taxes and insurance, including payroll taxes, insurance premiums, wages, or other employment-related fees. The Consignee is exclusively liable for such fees and payments.

FORTUITOUS EVENT:

No Party shall be held liable in case of a fortuitous event and by which Parties are not at fault, or by acts of God which parties could not have reasonably foreseen or foreseen but could have been avoided.

INDEMNITY:

Each Party hereby agrees to indemnify and hold harmless the other Party, their employees and representatives against any and all damage, liability, and loss, as well as legal fees and costs incurred that may arise or otherwise relate to this Agreement. This clause shall not be read to provide indemnification for any Party in the event that a competent court of law, rendering a final judgment, holds that the bad faith, gross negligence, or willful misconduct of the Party caused the damage, liability, or loss.

RELATIONSHIP OF THE PARTIES:

The Parties hereby acknowledge and agree that nothing in this Agreement shall be deemed to constitute a partnership, joint venture, agency relationship or otherwise between the Parties and that this Agreement is for the sole and express purpose of the consignment and sale of the Product.

TERMINATION:

This Agreement may be terminated by either Party, upon notice in writing of at least [Insert number of days] notice, in the event that either the Consignee defaults on any obligation or indicates to the Consignor that Consignee will not perform or that the Consignee feels the Product will not be sold. In case of termination of this Agreement, the Consignee will return the Product to the Consignor within the following time period: [Insert time period that the Consignee has to return the Product to the Consignor if the agreement is terminated]

If the Agreement is not terminated, it will continue until the entirety of the Product is sold and fees have been paid to each Party.

GENERAL PROVISIONS: 

  1. Governing law: This Agreement shall be governed in all respects by the laws of the state of [Insert name of state] and any applicable federal law. Both Parties consent to jurisdiction under the state and federal courts within the state of [Insert name of state]. The Parties agree that this choice of law, venue, and jurisdiction provision is not permissive, but rather mandatory in nature.
  2. Dispute Resolution: If there is a dispute between the Parties arising out of or otherwise relating to this Agreement, the Parties shall meet and negotiate in good faith to attempt to resolve the dispute. If the Parties are unable to resolve the dispute through direct negotiations, then, except as otherwise provided herein, either party must submit the issue to binding arbitration in accordance with the then-existing Commercial Arbitration Rules of the American Arbitration Association. The arbitration shall be conducted by a single arbitrator and the Arbitrator shall be willing to execute an oath of neutrality. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRAL CLAIMS.
  3. Language: All communications made or notices given pursuant to this Agreement shall be in the English language.
  4. Assignment: This Agreement, or the rights granted hereunder, may not be assigned, sold, leased or otherwise transferred in whole or part by either Party.
  5. Amendments: This Agreement may only be amended in writing signed by both Parties.
  6. No Waiver: No terms of this Agreement shall be deemed to have been waived by any act or acquiescence of either Party. Only an additional written agreement can constitute waiver of any of the terms of this Agreement between the Parties. No waiver of any term or provision of this Agreement shall constitute a waiver of any other term or provision or of the same provision on a future date. Failure of either Party to enforce any term of this Agreement shall not constitute waiver of such term or any other term.
  7. Severability: If any provision or term of this Agreement is held to be unenforceable, then this Agreement will be deemed amended to the extent necessary to render the otherwise unenforceable provision, and the rest of the Agreement, valid and enforceable. If a court declines to amend this Agreement as provided herein, the invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the remaining terms and provisions, which shall be enforced as if the offending term or provision had not been included in this Agreement.
  8. Entire Agreement: This Agreement constitutes the entire agreement between the Parties and supersedes any prior understandings, whether written or oral.
  9. Headings: Headings to this Agreement are for convenience only and shall not be construed to limit or otherwise affect the terms of this Agreement.

What should be included in a Consignment Agreement?

A Consignment Agreement is a document between two parties, called the "Consignor" and the "Consignee," where one party (the Consignee) agrees to sell goods on behalf of the other party (the Consignor). As a result any enforceable sample Consignment Agreement should include the following necessary elements of a contract, which our Consignment Agreement template - free to our customers - includes as standard. We do not believe that just because it is a free Consignment Agreement, it should be missing any fundamental or crucial clauses.

  • TItle and consignment of goods: This clause stipulates that the consignor remains the owner of the product until it is sold, and whether the Consignment Agreement is exclusive or nonexclusive. 
  • Agreement: Broadly outlines the agreement by stating that the consignor will deliver the products to the consignee for sale and that can be done through any means. Additionally, the fact that the consignee has no rights to the products is acknowledged here. 
  • Fees and payment: The payment terms are detailed in this clause and how any fees or payments can be changed in the future. The template agreement also demands that the consignee keeps accurate records of sales for the consignor. 
  • Credit sale: If a consignee agrees to a credit sale, the full purchase price becomes the responsibility of the consignee to pay the consignor. For that reason, the section also identifies that the consignor does not recommend this course of payment plan. 
  • Loss and damage: How any loss or damage, before or after delivery to the consignee, is dealt with is outlined here. For example, the consignee must maintain insurance equal or greater than the replacement cost of the product. If a product is damaged before delivery, the consignor is liable for that loss. 
  • Delivery expenses: Who bears the cost of the shipping expenses for delivery of a product is explored in this short clause. 
  • Employment taxes: Under the structure of this Consignment Agreement, the consignor has no responsibility for paying the consignees employment taxes or insurance - or any employment related fees for which the consignee is exclusively liable. 
  • Fortuitous event: Should there be an unforeseen event, this clause identifies that no party shall be held liable. 
  • Indemnity: The indemnity clause in this agreement formally indemnifies either party against any damage or liability that may relate to the wider agreement. However, should any loss or damage have been incurred due to willful misconduct or gross negligence, then indemnity shall not be provided.
  • Relationship: The agreement is on a consignment basis only, so this clause identifies that no other type of relationship has been formed in the business arrangement - for instance, a joint venture, partnership or agency relationship.  
  • Termination: How the subject of terminating the agreement comes into discussion. Additionally, how many days’ notice that needs to be provided on either part should be included and what should occur if either party believes that the other side has not upheld their responsibilities. 
  • General provisions: Finally, the remaining general provisions are listed in this section with many sub clauses. Governing law, for example, is identified as well as how a dispute could be addressed in addition to how amendments or the subject of severability should be approached. 

When should I use a Consignment Agreement? 

Consignment Agreements should be used when two parties need to outline and detail the obligations and responsibilities that will characterize the nature of their consignor/consignee relationship. Consignment Agreements can be either exclusive or non-exclusive, If you have an exclusive Consignment Agreement in place, that is when the consignee is the only entity that can sell items on behalf of the consignor. When it comes to non exclusive Consignment Agreements, the opposite is true - a consignor may have many consignees in place selling their goods. 

Why should I use a Consignment Agreement?  

Consignment Agreements can be drafted for any sort of consignment sale between two parties. Consignees can be used to sell just one product or a series of products. In consignment Agreements, the Consignee agrees to sell the product under certain conditions and the Consignor gives the Consignee the right to sell under those same conditions. Within these agreements, the Consignor and Consignee outline their expectations for behavior and agree to the bounds of the relationship between them.

Where and how should I use a Consignment Agreement template? 

Our Consignment Agreement sample can and should be used in any situation where you need to create a contract that outlines the expectations of both parties before work actually begins. Using our Consignment Agreement template to help you do that is a great way to save time and money through automation as our template can populate automatically using our dynamic data software. Furthermore, should you need to create a product supply agreement or licensing agreement in addition to or instead of a Consignment Agreement, that can be easily done in the same automated fashion. 

What’s great about that is that if you need this type of agreement frequently, you never have to start from scratch. Our app further supports this work as it means that you can draft, sign, execute and store any and all of your contracts with our easy to use software - making creating them a far more streamlined process. You can collaborate with the other parties through our technology in an all in one contract flow that can sync in with other apps you all use, ensuring that finalizing a contract is done as efficiently and effectively as possible. 

The end result is a contract for all involved where the administrative burden has been materially diminished, yet the final product is of the highest quality. All work that consequently stems from the agreement is far more likely to be of a similarly high quality as the contract promotes a smarter and better way of doing business. 


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