Consignment Inventory Contract Template for England and Wales

A Consignment Inventory Contract is a specialised commercial agreement that allows you to supply goods for sale while retaining legal ownership until the point of sale. This arrangement is particularly common in retail, manufacturing, and distribution sectors where suppliers want to maintain control over their inventory while expanding market reach through third-party sellers.

When do you need this document?

You need a Consignment Inventory Contract when operating a business model where goods are placed with retailers or distributors who sell on your behalf without purchasing upfront. This is essential for manufacturers placing products in retail stores, artists placing artwork in galleries, or suppliers working with warehouse distributors. The contract becomes crucial when you want to maintain ownership rights while allowing others to display, store, and sell your goods. It's also necessary when establishing relationships with new retail partners where you want to minimise their initial investment while expanding your market presence.

Key legal considerations

The contract must clearly define ownership retention and risk allocation between parties. You need to specify when title transfers, typically at the point of sale to the end customer, and who bears responsibility for loss, damage, or theft during storage. Payment terms require careful structuring, including when and how you'll receive proceeds from sales, commission rates for the consignee, and accounting procedures. The agreement should address insurance requirements, with clear provisions about who maintains coverage for the consigned goods. Storage and handling obligations must be detailed, including proper care standards, security measures, and any special requirements for your products. Reporting obligations are crucial, establishing how often sales reports must be provided and what information they should contain.

Legal requirements in England and Wales

Under the Sale of Goods Act 1979, your contract must clearly establish that ownership remains with you until sale to prevent the consigned goods from being treated as sold to the consignee. The Supply of Goods and Services Act 1982 governs the service elements of the arrangement, including storage and handling obligations. If your goods will be sold to consumers, the Consumer Rights Act 2015 may apply, requiring your contract to address consumer protection responsibilities. The Factors Act 1889 provides important protections for mercantile agents acting with your authority, which may be relevant depending on your consignee's role. You should also consider the Commercial Agents Regulations 1993 if your arrangement involves ongoing commercial agency relationships. The contract must include proper termination clauses covering return of unsold goods, final accounting, and settlement of outstanding amounts.