Consignment Agreement Template for Saudi Arabia

The Consignment Agreement is a crucial commercial document used in Saudi Arabia when a business (Consignor) wants to supply goods to another party (Consignee) for sale while retaining ownership until the final sale to customers. This arrangement is particularly valuable for businesses seeking to expand their market presence without establishing direct retail operations, or for retailers wanting to minimize inventory investment risk. The agreement must comply with Saudi Arabian commercial law, including the Commercial Court Law and Commercial Agencies Law, while adhering to Sharia principles. It typically includes detailed provisions for inventory management, commission structures, reporting requirements, and risk allocation. This document type is especially relevant for cross-border trade relationships and domestic distribution arrangements where parties seek to balance risk and opportunity in their commercial relationship.

1. Parties: Identification of the Consignor and Consignee with full legal names, commercial registration details, and authorized representatives

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

3. Definitions and Interpretation: Key terms used in the agreement, including specific commercial and legal terminology relevant to consignment arrangements

4. Appointment and Scope: Terms of the Consignee's appointment and scope of authority to sell consigned goods

5. Duration and Termination: Term of the agreement, renewal provisions, and circumstances for termination

6. Delivery and Storage: Procedures for delivery, storage requirements, and handling of consigned goods

7. Pricing and Commission: Pricing mechanism for consigned goods and commission structure for the Consignee

8. Payment Terms: Payment procedures, timing, and currency specifications (ensuring Sharia compliance)

9. Title and Risk: Retention of title provisions and allocation of risk for consigned goods

10. Obligations of Consignor: Responsibilities including product supply, quality standards, and support

11. Obligations of Consignee: Responsibilities including storage, sales efforts, reporting, and customer service

12. Reporting and Records: Requirements for inventory management, sales reporting, and record-keeping

13. Warranties and Representations: Standard warranties regarding authority, capacity, and product quality

14. Liability and Indemnification: Allocation of liability and indemnification obligations between parties

15. Governing Law and Jurisdiction: Specification of Saudi law as governing law and jurisdiction for disputes

16. General Provisions: Standard clauses including notices, amendments, and entire agreement provisions