Simple Consignment Agreement Template for Canada

A Simple Consignment Agreement is a commercial contract that allows you to place your goods with another party for sale while retaining ownership until the items are actually sold to end customers. Under Canadian law, this arrangement creates a unique legal relationship governed by federal and provincial legislation, including the Sale of Goods Act and Personal Property Security Act.

When do you need this document?

You need a Simple Consignment Agreement when placing inventory with retailers, galleries, or other sellers without immediately transferring ownership. This is common for artists placing artwork in galleries, manufacturers testing products in new retail locations, seasonal businesses placing goods with stores, or specialty product creators working with boutique retailers. The agreement is essential when you want to maintain control over pricing, retain ownership until sale, and ensure proper accounting of your goods.

Key legal considerations

Several critical elements must be addressed in your consignment agreement. Commission rates and payment terms should be clearly specified, including when payments are due after sale and any deductions for marketing or storage costs. The agreement must define who bears responsibility for loss, damage, or theft of goods, and establish insurance requirements. Pricing authority and discount policies need clear parameters to prevent disputes. You should include provisions for regular inventory reporting, return of unsold goods, and termination procedures. The agreement must also address whether the consignee can modify, repair, or combine goods with other products.

Legal requirements in Canada

Canadian consignment agreements must comply with multiple layers of legislation. The Sale of Goods Act in each province governs the transfer of title and establishes rights and obligations of parties. Under the Personal Property Security Act (PPSA), you may need to register your security interest in consigned goods to protect against the consignee's creditors. Federal Excise Tax Act requirements apply to GST/HST reporting and remittance on consignment sales. If goods are sold to consumers, provincial Consumer Protection Acts and Business Practices Acts impose additional obligations on the consignee regarding disclosure, warranties, and return policies. The agreement should specify which party handles tax registration, collection, and remittance responsibilities. Documentation requirements vary by province, so ensure your agreement meets local filing and notice requirements to maintain your legal protections.