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Consignment Agreement

This Agreement is entered by and between Jonas Adam, individually or collectively as the "Signee" and Jane Smith, as the "Signer", together referred to as the "Parties".
The Contract is dated [the date both parties sign].

1. Agreement terms

The Parties agree that the following agreement is dependent on the terms presented as follow:

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What is a Consignment Agreement?

A Consignment Agreement is a legal contract that is made between two parties. It covers the sale of products or goods when the owner wants to designate a legally appointed salesperson that can sell the product or good without losing their right to ownership. The original owner, or Consignor, will make this agreement with the Consignee, or seller. This is similar to a vendor agreement, except there's the extra step of the Consignor keeping ownership of the goods until they're sold. The agreement entrusts the goods and products to the Consignee, who will handle the sale of these products to the Consignor’s customers. Payment for the sale of the goods will be remitted to the Consignor after the goods are purchased. 

This agreement is different than the Distribution Agreement because with a Distribution Agreement the Consignee does not retain their ownership over the goods. They are a middleman who temporarily holds the goods until they are released through purchases. The Consignee never has ownership of the goods, despite them being in his possession. The Consignor can always request that the goods be returned to them after a designated span of time. 


Why should I use a sample Consignment Agreement template?

Consignment Agreements are incredibly useful, but you need to make sure that you enact them properly. That’s why we offer a sample Consignment Agreement template. For Consignors, the Consignment Agreement is necessary to ensure that they retain ownership of their goods and services. It protects them should anything go wrong, or should the Consignor attempt to steal the goods without remitting the profits from sales. 

Consignment Agreements are very convenient because they allow goods to be sold without having to run on a per invoice basis. This is much more convenient, but without the Consignment Agreement, the expensive goods may not be returned to them. The Consignee may not be able to pay for the goods until they are sold to the customer because of the high ticket value of the item, so the Consignment Agreement protects the Consignor should the Consignee fail to pay them upon sale.

Essentially, a Consignment Agreement is a necessary legal document to protect your interests if you have a business that requires you to have someone sell products on your behalf instead of devoting the time and resources into doing so yourself. If you want to make it a formal business document, then both parties will need to outline specific terms and conditions. 


It is important to set a minimum price in the Consignment Agreement, so the Consignee knows how to price their sales and promotions! (Source)

What are the benefits of a Consignment Agreement? 

There is usually a very good relationship between the Consignor and Consignee. After all, the Consignor is trusting the Consignee with their products and trusting that they will send the money upon sale. This allows for a variety of benefits. 

For a supplier, it is advantageous to be able to use the retail space of the seller instead of having to pay to store their products until they are sold. The retail option also attracts potential buyers that may not come to the Consignor’s space. Considering where the stocks are displayed, how to allow customers to easily find them, are separate the different types of goods are important. You also need to coordinate promotions to increase sales volume. 

This also allows for communication and a solid relationship between a supplier and a retailer. Both parties will be able to keep track of the inventory and turnover in any given time period. This allows them to establish bulk orders that are amenable to both parties. When you are more accurately able to order and sell the right quantity, you get a better relationship going between both parties. 

For retailers and Consignees, one major perk is saving money on the cost of keeping inventory stocked. Because the Consignee isn’t providing the capital for the sale of the goods, they don’t have to pay the supplier until the goods are sold. This improves their cash flow, leaving less money tied up in inventory and more money for marketing, which is beneficial to both parties. 

This also allows the product to get to the customers more quickly. Without spending capital, the retailer is more likely to stock your products. Your goods are more likely to be put on trade floors and in storefronts than Distribution Agreements, where the Consignor has to come up with the money for the product up front. This allows the goods to be displayed where customers can see and touch products before buying them, 

Customers are more likely to purchase goods when they can pick them up and inspect them first. (Source)

It also lets you restock as items sell rather than playing guessing games about the products. This prevents any lag where your items are out of stock to potential buyers. It also prevents storerooms from overflowing with goods that aren’t moving. 


How do I account for products in a Consignment Agreement?

Our sample Consignment Agreement template will help you determine the best way to account for product sales, but here are some things to consider.  Keep these in mind as you consider your terms.

First, you need to know how insurance is handled. Will the goods be insured by the Consignor or the Consignee? If the goods are currently covered with the Consignor’s policy, will that coverage still be applicable if the goods are Consigned? If this would invalidate the insurance policy, then you need to account for who will handle coverage.

When you are dealing with accounting, you should make sure you are on the same page with the accounting process. There should be a reliable system in place that can track incoming and outgoing stock of goods. This report will regularly inform the supplier and the retailer about stock volumes and help them track when payments need to be remitted to the Consignor. 


What should a sample Consignment Agreement template contain?

The sample Consignment Agreement template should make it easy for you. The form will have the important pieces of information for your sale. 

This includes the names of the Consignor and Consignee. This will also require you to define the terms of payment; whether the Consignee will remit payment on a per item basis or at designated periods of time, or when a certain amount of sales have been reached.

You need to dictate the rights to sell to the Consignee and any of your terms and conditions. Be specific. You also need to set a minimum price for your products, so that if a Consignee decides to offer a sale or promotion they know your bottom price that you’re willing to accept for the items. This way, if the Consignee decides to sell below that minimum, they know they will be responsible for paying the difference out of pocket. 

You also need to set a consignment fee. This is a percentage of the full purchase price that the Consignee will receive for selling your goods. Insurance needs to be designated as well. You need to outline the minimum expected insurance coverage for the goods and dictate which party will need to maintain it. 

You can also designate any authorized store locations that he goods can be stored. This is where inventory will be held, so it can be accessed by both parties. Dictate how long the Consignment Agreement is for so that products are remanded to the Consignor after the Agreement expires. Mention any representation and applicable costs and laws. 

Horse Bills of Sale and Consignment Agreements

The purchase of a horse can be done for a myriad of reasons. Horses for personal pleasure to ride around with family is very common while other owners purchase a horse with great genetics to race them. An owner of a stable of horses could enter into a consignment agreement with a broker that has sold horses in the past. Care of the horses and the expenses are going to be the responsibility of the owners.

A horse bill of sale is a document that proves ownership of the horse. These bills of sale occur with a variety of items and not only horses. Boats are another great example while cars require a title transfer. The bill of sale ensures that there is not going to be a dispute due to miscommunication of terms verbally. 

People that have been involved in selling horses for decades understand the importance of a horse bill of sale for every horse sold. Horses can cost thousands of dollars so they are seen as a large investment that needs to be protected. Below are a few details that every horse bill of sale needs to protect all parties:

  • The presentation of updated medical records for the horse from a licensed veterinarian that has extensive experience with horses.
  • Conditions for refunds and deposits are extremely important. Deposits are done in good faith to show a true desire to purchase the horse. Without these deposits, a buyer could change their mind and the seller could have sold the horse to another qualified buyer. 
  • The transfer of registration papers of the horse is essential.
  • The pricing and dates of the transfer of ownership need to be included.
  • The identification of the horse is imperative. This will include the physical features of the horse like color and sex. The name of the horse should also be included in the bill of sale. 
  • Signatures are required from both the buyer and the seller.
  • Other details like how payment will be done and the price will also be included in this extremely important document. 

Do not underestimate the importance of a horse bill of sale. Unfortunately, not every seller will have the best interests of the buyer in mind. 

Security Deposit Return Letters

A security deposit return letter can be an exciting time for a person that has just had a lease expire. Alternately, this could be a time of frustration when realizing part of the deposit has been kept by the landlord or leasing company. This could be due to terminating the lease early or damages the property has endured during your time in the unit. Below are the reasons for potential expenses that will reduce the amount of your security deposit that is returned:

  • Rent is still owed by the tenant.
  • Damage to the property including appliances or holes in walls.
  • The apartment is left in squalor leading the landlord to have to hire professional cleaners before the unit is leased again.

Disputing damages can be done so it is of utmost importance to photograph the apartment when moving in and moving out. Unethical landlords could claim damages that were already present in the unit to increase their revenue. 


Arbitration Agreements and Employee Warning Letters

Arbitration agreements are entered into quite frequently to avoid going to court. A 3rd party that can settle a dispute can be very helpful if the two parties cannot come to any sort of agreement. This reduces legal fees immensely as dragging out lawsuits is commonly done by one party or the other. These agreements are not only done in business but in cases like that of divorce if final terms or division of property continues to be an issue. 

Arbitration agreements in regards to employee warning letters can save quite a bit of time and conflict. Listing out scenarios where arbitration is an option is very important. A company does not want employees to take every conflict to arbitration. Certain employee warning letters can follow a member of the staff for the duration of their professional career. In extreme cases like sexual harassment, this goes on a person’s permanent employment record.

The following are a few items that should help in the case of the arbitration becomes a necessity when an employee receives a warning letter:

  • The arbitration agreement needs to be present and thoroughly written. Lack of specific details in this agreement can lessen its impact. 
  • Evidence for the warning letter needs to be as organized as possible. Signatures that confirm that an employee received the letter need to be gathered. HR departments with years of experience understand a paper trail for potential terminations can be a lifesaver. A follow up after the meeting via email that confirms that the employee understands why they were given the letter is just another piece of evidence. 
  • Specifying how an arbitrator is selected is extremely important. The criteria should be thorough as certain industries will require knowledge that not every arbitrator possesses. The selected arbitrator has to be agreed upon by all parties involved. 

Arbitration can be a great way to save time and money when it comes to disgruntled employees that have been given an employee warning letter. An arbitration agreement can be a part of the employment paperwork that new staff fills out during their infancy at a company. Consider an arbitration agreement as it could be the perfect way to reduce headaches caused by underperforming staff members. 

Security Deposit Return Letters

Most adults have signed a lease at one point in their life or another whether it is a commercial or residential property they are renting. The security deposit is a staple of protecting landlords from less than desirable tenants. A security deposit return letter needs to be sent within the timeline that is outlined in a state’s law. These timelines vary from around 15 days to 60 days.

Below is information that should be included in a security deposit return letter: 

  • Itemized deductions for specific damage done to a unit.
  • Terms of the lease that were violated if this has occurred. 
  • Bills like that of electric or phone that went unpaid which are now the responsibility of the landlord.
  • Photos of any damage or the mess left by a former tenant.

Security deposit return letters are important to send and format in the correct way. An upset tenant could file a lawsuit but with the right amount of evidence, a judge will make the right decision. 

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