Consignment contract

Free Consignment Agreement Template Samples

To help you grow your business, we've created a fairly simple yet reliable consignment contract template in Word and PDF versions so you can use it over and over.

What's in this model?

• Time range

• Insurance 

• Payment terms

What is a consignment contract?

A consignment agreement is a legally binding document between two parties, a consignee (a person who has something to sell) and a shipper (a person who agrees to sell that item) for sale, storage, transfer, resale and use of items. Whoever offers something for sale pays the seller part of the sale price for his service.

The recipient, who receives the items, can do whatever they want with them. When he has finished using them, he pays the seller the rest of the sale price through a consignment contract. The recipient may not sell, give away, rent or destroy the items without the authorization of the seller.

What is consignment?

Consignment is a contract by which the recipient of the goods (the seller) entrusts it to the recipient of the goods (the consignee) who pays him part of the price and can do what he wants with them, except sell, give, rent or destroy the items without the seller's permission. And when he has finished using them, he pays the seller the rest of the price through a consignment contract.

Consignment is a contract by which the recipient of the goods (the consignee) entrusts it to the recipient of the goods (the seller) who pays him part of the price and can do what he wants with them, except sell, give, rent or destroy the items without the seller's permission. And when he has finished using them, he pays the seller the rest of the price through a consignment contract.

The recipient, who receives the items, can do anything with them except sell, give away, rent or destroy the items without the seller's permission. He must pay the remaining price at the end of the consignment.

What are the types of consignment contracts?

• The consignment contract with pro rata payment:

The consignee pays half the price before sending the goods. And the rest is paid in installments (during the consignment) as needed.

• The consignment contract with payment on delivery:

The consignee pays the price in advance and receives the goods in exchange. He pays the rest of the price upon delivery of the goods.

• The consignment contract with payment on scheduled delivery and in installments:

The consignee pays the price in advance and receives the goods in exchange. He pays the rest of the price several times (during the consignment) as needed.

What is a consignment contract used for?

A consignment agreement helps someone who wants to sell something to someone without entering into a direct agreement with the buyer. According to this agreement, the sender is a person who charges a fee for the sale of the item on behalf of the owner. This method is very useful to get a good amount. The consignment contract has several clauses and informs both parties of all the details of the contract. 

Important Terms

What are the components of consignment agreements?

The most important elements that your consignment agreement should include are:

Payments

Payment is undoubtedly the first thing you should think about when considering a shipment, namely how much you will be paid once your product is sold. This is why it is very important to mention the payment amount in your written contract. You need to set a minimum sale price to guarantee a decent share of the sale, even if your item ends up on clearance.

Methods of payment and accounting

You should include payment terms in your contract outlining all the details regarding payment term, method, amount, etc. Payment terms should be based on the retailer's return policy. A product creator should keep track of inventory with each retailer, receiving a regular inventory update.

Shipping costs

If you are dealing with retailers living outside of your area, it is important to include shipping costs in your consignment contract.

Time range

You also need to add the shelf life of the item at a retailer, i.e. how long the retailer should keep the item. It is mandatory for seasonal items such as summer dresses or other themed products.

Insurance

It is important to have valid product insurance before entering into or signing a consignment agreement. To do this, you must request proof of product insurance.