LawDepot offers quick and efficient Consignment Agreement forms. When using our template, we’ll ask you for the following information:
Provide a physical description of the item for sale, including its condition. You can add multiple items in a single contract. If necessary, you may also attach images of the items to the contract.
Provide the names, addresses, and contact information of both the consignor and the consignee. In addition, our questionnaire will ask you to specify whether each party is an individual or a corporation.
Contract and cancellation terms
Outline whether the contract is fixed or indefinite, and provide the necessary dates. As covered above, a fixed term ends on a set date, and an indefinite term does not.
You must also specify whether either party can cancel the contract before the goods are sold. These cancellation terms define how much notice is required for the contract cancellation and who will return the goods upon a terminated Consignment Agreement.
To complete a Consignment Agreement, outline how the consignee will be compensated. They can be paid with any of the following fee structures:
- Fixed fee per item: The consignee will receive a fixed fee for each item sold
- Flat fee for all items: The consignee will receive a flat fee for the sale of all items
- Percentage of the sale: The consignee will make a set percentage of the items’ sale price
The average percentage of a sale provided to the consignee is usually between 20 and 60%. Fixed and flat fees vary widely, usually based on the value of the item or items being sold.
The Consignment Agreement must also disclose how long the consignee has to pay out the consignor once the sale is finalized. In addition, include the payment method in which the consignee will make payments. Methods may include:
- Cash
- Check
- Direct deposit (EFT)
- Venmo
- Other
You also have the option to include details regarding late payments. If the consignee does not pay the consignor by the contractual date, interest may be charged on the amount owed. Generally, reasonable late payment charges are up to 25% per year on unpaid sums.
Security interest
The consignee may grant a purchase security interest, which protects the consignor’s interest in the goods. This is most commonly granted for valuable goods over $1,000.
A purchase security interest guarantees that the goods will be returned to them if the consignee files for bankruptcy or the inventory is seized. It works as a legal claim for the consignor.
If a security interest is granted, the consignor must file a Uniform Commercial Code financing statement in the appropriate jurisdiction before the goods are transferred from the consignor to the consignee.
Outline who is responsible for storing the goods and delivering them to the customer following a sale. The individual accountable for storage and delivery is responsible for maintaining insurance covering the goods in the event of theft, damage, or destruction.
Dispute resolution
In your Consignment Agreement, you may specify how disputes are resolved if they cannot be resolved privately. Our template allows you to not include dispute resolution terms in your contract or select from the following:
- Mediation
- Arbitration
- Mediation followed by arbitration
Mediation involves a neutral third party to help the consignor and consignee reach an agreement. During mediation, the third party is only there to lend advice and facilitate collaboration. The mediator cannot determine the outcome of the dispute.
Arbitration involves a neutral third party resolving the dispute, with a decision by which both the consignor and consignee are bound.