Simple Consignment Agreement Template for New Zealand

A Simple Consignment Agreement is a commercial contract that allows you to place your goods with another party for sale without requiring them to purchase the items upfront. Under New Zealand law, this arrangement provides significant benefits for both suppliers seeking market access and retailers looking to expand their product offerings while minimizing financial risk. The agreement ensures that you retain ownership of your goods until they are actually sold to end customers.

When do you need this document?

You need a Simple Consignment Agreement when establishing a retail partnership where goods are placed for sale without immediate payment. This is particularly common in industries such as fashion, artisan crafts, books, electronics, and specialty foods. Many small businesses use consignment arrangements to test new markets without requiring significant upfront investment from retailers. Art galleries frequently operate on consignment models, displaying works while artists retain ownership until sale. Additionally, seasonal businesses often use consignment agreements to place inventory with multiple retailers during peak selling periods without requiring bulk purchases.

Key legal considerations

Your consignment agreement must clearly define the roles and responsibilities of both parties to avoid disputes. Commission rates and payment terms should be explicitly stated, including when payments are due after sales occur. The agreement should specify who bears responsibility for damaged, lost, or stolen goods while in the consignee's possession. Insurance requirements must be clearly outlined, determining whether the consignor or consignee provides coverage. Inventory management procedures should be established, including regular reporting requirements and stock rotation policies. Termination clauses are crucial, detailing how unsold goods will be returned and within what timeframe. Pricing authority should be clearly defined, establishing whether the consignee can offer discounts or must maintain set prices.

Legal requirements in New Zealand

Under the Contract and Commercial Law Act 2017, your consignment agreement must meet basic contract formation requirements including offer, acceptance, and consideration. The Personal Property Securities Act 1999 requires that consignment arrangements be properly documented to protect your security interest in the goods. If you're dealing with consumer goods, the Consumer Guarantees Act 1993 may apply to end sales, and your agreement should address how warranty obligations are handled. The Fair Trading Act 1986 prohibits misleading conduct, so all terms must be clearly and accurately stated. You may need to register your security interest under the Personal Property Securities Register to ensure priority over other creditors. Goods and Services Tax implications should be considered, particularly regarding who is responsible for GST registration and payment on sales transactions.