Consignment Stock Agreement Template for Indonesia

A Consignment Stock Agreement is a specialized commercial contract that allows you to place goods with a retailer or distributor while maintaining ownership until the final sale to end customers. Under Indonesian law, this arrangement provides significant flexibility for both suppliers and retailers, enabling effective inventory management without immediate payment obligations.

When do you need this document?

You need a Consignment Stock Agreement when entering new markets where you want to test product demand without requiring upfront payment from retailers. This document is essential for high-value items like electronics, luxury goods, or specialized equipment where retailers prefer not to tie up capital in inventory. The agreement is particularly valuable for seasonal products, new product launches, or when establishing relationships with new distribution partners in Indonesia's diverse retail landscape.

Key legal considerations

The agreement must clearly define ownership rights, as goods remain your property until sold. Commission structures and payment terms require careful specification to avoid disputes, including when payments are due and acceptable deductions. Storage and insurance responsibilities must be explicitly allocated, particularly regarding damage, theft, or deterioration during the consignment period. The document should address reporting obligations, requiring regular sales and inventory reports from the consignee. Termination clauses need careful drafting to cover return procedures, unsold stock, and notice periods. Risk allocation provisions must specify who bears responsibility for various scenarios including market fluctuations and product defects.

Legal requirements in Indonesia

Under Indonesian Civil Code and Trade Law No. 7 of 2014, consignment arrangements must comply with general contract principles including good faith and fair dealing. The agreement must satisfy requirements under Minister of Finance Regulation No. 70/PMK.03/2022 regarding tax treatment of consignment transactions, including proper invoicing and reporting procedures. Consumer Protection Law No. 8 of 1999 applies when goods are sold to end consumers, requiring proper product information and warranty provisions. Partnership regulations under Government Regulation No. 44 of 1997 may apply depending on the arrangement's structure. The document should address Indonesian labor law requirements if the consignee's staff will handle your products. Currency and foreign investment regulations must be considered for international consignment arrangements, ensuring compliance with Bank Indonesia regulations and foreign investment laws.