Consignment Sales Agreement for Malaysia

Consignment Sales Agreement Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that establishes the terms and conditions under which one party (the consignor) provides goods to another party (the consignee) for sale without transfer of ownership until the actual sale occurs. This document outlines the responsibilities of both parties, commission structures, handling of unsold goods, risk allocation, and reporting requirements, while ensuring compliance with Malaysian commercial law, particularly the Contracts Act 1950 and Sale of Goods Act 1957. It provides a framework for businesses to expand their market reach without requiring significant upfront inventory investment from the seller.

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What is a Consignment Sales Agreement?

The Consignment Sales Agreement is a crucial document for businesses operating in Malaysia who wish to establish a consignment-based sales relationship. This arrangement is particularly valuable when manufacturers, distributors, or product owners want to expand their market presence without requiring retailers to purchase inventory upfront. The agreement, governed by Malaysian law including the Contracts Act 1950 and Sale of Goods Act 1957, covers essential aspects such as product handling, commission structures, sales reporting, and risk allocation. It's commonly used in various sectors from retail to luxury goods, providing flexibility in inventory management while protecting both parties' interests. The document is especially relevant in Malaysia's dynamic retail market, where consignment arrangements are increasingly popular for both traditional and e-commerce business models.

What sections should be included in a Consignment Sales Agreement?

1. Parties: Identification of the consignor (owner of goods) and consignee (seller) with full legal names and addresses

2. Background: Context of the agreement, brief description of the business relationship and purpose of the consignment arrangement

3. Definitions: Definitions of key terms used throughout the agreement including 'Consigned Goods', 'Consignment Period', 'Sales Price', 'Commission'

4. Appointment and Scope: Terms of appointment of consignee and scope of authority to sell consigned goods

5. Ownership and Risk: Clear statement that ownership remains with consignor until sale, and allocation of risk of loss

6. Delivery and Storage: Terms for delivery of goods to consignee and requirements for storage and maintenance

7. Pricing and Commission: Structure of pricing, commission rates, and payment terms

8. Sales Procedures: Required procedures for selling goods and handling customer transactions

9. Accounting and Reporting: Requirements for tracking sales, inventory, and financial reporting

10. Term and Termination: Duration of agreement and conditions for termination

11. Return of Unsold Goods: Procedures for returning unsold goods to consignor

12. General Provisions: Standard legal provisions including governing law, notices, and entire agreement

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

1. Insurance: Specific insurance requirements when high-value goods are involved

2. Marketing and Display: Requirements for marketing and displaying goods when specific presentation standards are needed

3. Exclusivity: Terms of exclusive rights when territorial or product exclusivity is granted

4. Minimum Performance: Performance targets and consequences when specific sales targets are required

5. Online Sales: Additional terms for online sales channels when e-commerce is involved

6. Intellectual Property: IP protection terms when branded or proprietary goods are involved

7. Data Protection: Privacy and data protection terms when customer data handling is involved

8. Force Majeure: Force majeure provisions when additional risk management is needed

What schedules should be included in a Consignment Sales Agreement?

1. Schedule 1 - Consigned Goods: Detailed list of consigned goods with descriptions, SKUs, and quantities

2. Schedule 2 - Commission Structure: Detailed breakdown of commission rates, including any tiered pricing or special arrangements

3. Schedule 3 - Operating Procedures: Detailed procedures for handling, storing, and selling consigned goods

4. Schedule 4 - Reporting Templates: Templates for required sales and inventory reports

5. Schedule 5 - Territory: Definition of authorized sales territory or locations

6. Appendix A - Insurance Requirements: Detailed insurance requirements and coverage specifications

7. Appendix B - Quality Standards: Standards for maintenance and condition of consigned goods

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

Malaysia

Publisher

Genie AI

Document Type

Sale Agreement

Cost

Free to use
Relevant Industries

Retail

Fashion and Apparel

Consumer Goods

Luxury Items

Electronics

Art and Antiques

Automotive Parts

Furniture and Home Decor

Jewelry and Accessories

Books and Publications

Sports Equipment

Agricultural Products

Relevant Teams

Legal

Sales

Operations

Finance

Procurement

Compliance

Supply Chain

Retail Operations

Merchandising

Business Development

Contract Administration

Relevant Roles

Commercial Director

Sales Manager

Retail Operations Manager

Business Development Manager

Legal Counsel

Procurement Manager

Inventory Manager

Finance Manager

Compliance Officer

Supply Chain Manager

Store Manager

Category Manager

Merchandising Manager

Contract Administrator

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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