Consignment Sales Agreement for Canada

Consignment Sales Agreement Template for Canada

A comprehensive legal agreement governed by Canadian 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 final sale to customers. The agreement addresses key aspects including commission structures, risk allocation, reporting requirements, and operational procedures, while ensuring compliance with relevant federal and provincial legislation including the Sale of Goods Act, Personal Property Security Act, and applicable consumer protection laws. This document is particularly important in commercial relationships where inventory management, sales tracking, and clear ownership rights are crucial.

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What is a Consignment Sales Agreement?

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.

What sections should be included in a Consignment Sales Agreement?

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.

What sections are optional to include in a Consignment Sales Agreement?

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

What schedules should be included in a Consignment Sales Agreement?

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

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

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Sales Contract

Sector

Sales

Cost

Free to use
Relevant legal definitions
Relevant Industries

Retail

Luxury Goods

Art and Antiques

Fashion and Apparel

Automotive

Electronics

Jewelry

Sporting Goods

Industrial Equipment

Agricultural Products

Home Furnishings

Books and Publications

Specialty Foods

Craft and Artisanal Products

Relevant Teams

Legal

Sales

Operations

Finance

Risk Management

Compliance

Supply Chain

Commercial

Retail Operations

Merchandising

Business Development

Inventory Management

Relevant Roles

Commercial Director

Sales Manager

Retail Operations Manager

Business Development Manager

Legal Counsel

Contract Administrator

Inventory Manager

Finance Director

Risk Manager

Compliance Officer

Store Manager

Product Manager

Supply Chain Manager

Chief Financial Officer

Chief Commercial Officer

Merchandising Manager

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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