Consignment Agreement for United Arab Emirates

Consignment Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that establishes the terms and conditions under which one party (the Consignor) provides goods to another party (the Consignee) for sale, while retaining ownership until the goods are sold. The document addresses key aspects including delivery terms, pricing mechanisms, commission structures, inventory management, reporting requirements, and risk allocation, all within the framework of UAE commercial law and business practices. It includes specific provisions for compliance with UAE Federal Laws, including the Commercial Transactions Law and Civil Code, while establishing clear operational procedures and responsibilities.

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What is a Consignment Agreement?

The Consignment Agreement is a vital commercial document used in the United Arab Emirates when businesses wish to establish a sales arrangement where one party (Consignor) maintains ownership of goods while another party (Consignee) holds and sells them. This agreement type is particularly relevant in the UAE's dynamic retail and wholesale markets, where businesses often need flexible inventory arrangements. The document must comply with UAE Federal Law No. 18 of 1993 (Commercial Transactions Law) and related regulations, making it suitable for both mainland and free zone operations. It typically includes detailed provisions for inventory management, commission structures, reporting requirements, and risk allocation, while addressing specific UAE commercial practices and legal requirements. The Consignment Agreement is commonly used in various sectors including retail, luxury goods, and industrial equipment, providing a framework for businesses to expand their market presence without significant inventory investment.

What sections should be included in a Consignment Agreement?

1. Parties: Identification of the Consignor and Consignee with full legal names and addresses

2. Background: Context of the agreement and brief description of the business relationship

3. Definitions: Definitions of key terms used throughout the agreement

4. Appointment and Scope: Terms of appointment and scope of consignment arrangement

5. Delivery and Acceptance: Procedures for delivery, inspection, and acceptance of consigned goods

6. Pricing and Commission: Pricing mechanisms, commission structure, and payment terms

7. Title and Risk: Clarity on ownership of goods and risk allocation

8. Obligations of Consignor: Responsibilities and duties of the party providing the goods

9. Obligations of Consignee: Responsibilities and duties of the party receiving and selling the goods

10. Reporting and Accounting: Requirements for sales reporting, inventory management, and financial accounting

11. Term and Termination: Duration of agreement and termination provisions

12. Return of Goods: Procedures for returning unsold or rejected goods

13. Confidentiality: Protection of confidential information and trade secrets

14. Governing Law and Jurisdiction: Specification of UAE law application and jurisdiction

15. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

What sections are optional to include in a Consignment Agreement?

1. Insurance: Specific insurance requirements when high-value goods are involved

2. Marketing and Display: Requirements for product display and marketing when retail presentation is important

3. Minimum Performance Requirements: Sales targets and performance metrics when specific goals are required

4. Exclusivity: Exclusive rights and territorial restrictions if applicable

5. Storage and Handling: Specific storage requirements for sensitive or regulated goods

6. Quality Control: Quality standards and inspection procedures for specific product types

7. Intellectual Property: IP rights and usage when branded products are involved

8. Data Protection: Data handling requirements when customer data is collected

9. Force Majeure: Extended force majeure provisions for specific business risks

What schedules should be included in a Consignment Agreement?

1. Schedule 1 - Products: Detailed list of consigned products with specifications and pricing

2. Schedule 2 - Commission Structure: Detailed breakdown of commission rates and calculation methods

3. Schedule 3 - Operating Procedures: Detailed procedures for handling, storing, and selling consigned goods

4. Schedule 4 - Reporting Templates: Standard forms for inventory and sales reporting

5. Schedule 5 - Territory: Definition of geographical area or sales channels if applicable

6. Appendix A - Quality Standards: Specific quality requirements and inspection criteria

7. Appendix B - Return Procedures: Detailed procedures for handling returns and unsold goods

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Retail

Luxury Goods

Fashion and Apparel

Electronics

Industrial Equipment

Art and Antiques

Automotive

Consumer Goods

Manufacturing

Distribution and Logistics

Agricultural Products

Relevant Teams

Legal

Operations

Finance

Sales

Supply Chain

Risk and Compliance

Procurement

Business Development

Retail Operations

Commercial

Relevant Roles

Chief Executive Officer

Commercial Director

Sales Manager

Operations Manager

Supply Chain Manager

Legal Counsel

Contract Manager

Finance Director

Inventory Manager

Business Development Manager

Retail Operations Manager

Procurement Manager

Risk Manager

Compliance Officer

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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