The Consignment Sales Agreement is a crucial document in Canadian commercial practice, used when a business wants to sell products through another party without transferring ownership until the final sale. This arrangement is particularly common in retail, luxury goods, and specialty markets where products may be high-value or require specialized sales environments. The agreement needs to comply with Canadian federal and provincial legislation, including the Personal Property Security Act (PPSA) for security interests and the Sale of Goods Act for commercial transactions. The document typically includes detailed provisions for pricing, commission structures, inventory management, reporting requirements, risk allocation, and termination rights. It's essential for businesses looking to expand their distribution channels without taking on the full risk of traditional wholesale arrangements.
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1. Parties: Identification of the consignor and consignee, including full legal names and addresses
2. Background: Context of the agreement and general business relationship between the parties
3. Definitions: Key terms used throughout the agreement including 'Consigned Goods', 'Net Sales Proceeds', 'Commission', etc.
4. Appointment and Scope: Appointment of consignee and territory/location where goods may be sold
5. Consignment of Goods: Process for delivery, acceptance, and return of consigned goods
6. Title and Risk: Confirmation that title remains with consignor until sale; allocation of risk of loss
7. Pricing and Commission: Pricing guidelines, commission structure, and payment terms
8. Obligations of Consignee: Duties regarding storage, display, sales efforts, and reporting
9. Obligations of Consignor: Duties regarding delivery, product information, and support
10. Accounting and Payment: Requirements for sales recording, reporting, and remittance of proceeds
11. Term and Termination: Duration of agreement and termination provisions
12. Insurance: Required insurance coverage for consigned goods
13. Confidentiality: Protection of confidential information
14. General Provisions: Standard boilerplate clauses including governing law, notices, etc.
1. Marketing and Promotion: Specific requirements for marketing the consigned goods, used when parties want to specify marketing obligations
2. Minimum Performance Requirements: Sales targets or minimum performance standards, included when consignor wants to ensure specific sales levels
3. Storage and Handling Requirements: Detailed storage specifications, important for sensitive or high-value goods
4. Product Training: Requirements for staff training on products, relevant for technical or specialized goods
5. Intellectual Property: IP rights and usage guidelines, important when branded goods are involved
6. Non-Competition: Restrictions on selling competing products, used in exclusive arrangements
7. Security Interest: PPSA registration and security provisions, important for high-value consignments
8. Return and Disposal: Specific procedures for returning or disposing of unsold goods
1. Schedule A - Consigned Goods: Detailed list of products covered by the agreement, including descriptions and SKUs
2. Schedule B - Commission Structure: Detailed breakdown of commission rates, including any volume-based variations
3. Schedule C - Territory: Detailed description of authorized sales territory or locations
4. Schedule D - Reporting Requirements: Templates and specifications for required reports
5. Schedule E - Handling and Storage Requirements: Detailed specifications for product handling and storage
6. Schedule F - Minimum Insurance Requirements: Specific insurance types and coverage amounts required
7. Appendix 1 - Operating Procedures: Detailed procedures for day-to-day operations
8. Appendix 2 - Return Authorization Form: Standard form for processing returns to consignor
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