Consignment Agreement for the United States

Consignment Agreement Template for United States

A Consignment Agreement is a legally binding contract under U.S. law that establishes the terms and conditions under which one party (the consignor) provides goods to another party (the consignee) for sale. The consignee takes possession but not ownership of the goods and agrees to sell them on behalf of the consignor for a commission or fee. This agreement is governed by the Uniform Commercial Code (UCC) and state-specific commercial laws, addressing key aspects such as ownership rights, payment terms, risk allocation, and commission structures.

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What is a Consignment Agreement?

A Consignment Agreement is essential when establishing a business relationship where goods are provided for sale without transferring ownership. This document, governed by U.S. commercial law, particularly the UCC, outlines crucial elements including payment terms, commission structures, risk allocation, and responsibilities of both parties. The agreement is commonly used in retail, art galleries, and various commercial settings where direct ownership transfer is not desired. It protects both the consignor's ownership rights and the consignee's right to compensation, while establishing clear operational procedures and liability frameworks. The agreement should be carefully structured to comply with both federal and state-specific requirements, particularly regarding security interests and bankruptcy protections.

What sections should be included in a Consignment Agreement?

1. Parties: Identification of consignor and consignee with full legal details

2. Background: Context of the agreement and business relationship

3. Definitions: Key terms used throughout the agreement

4. Consignment Terms: Core terms including description of goods, pricing, and commission structure

5. Duration: Term of the agreement and renewal provisions

6. Title and Risk: Ownership rights and risk allocation

7. Payment Terms: Payment procedures, timing, and methods

8. Termination: Conditions for ending the agreement

What sections are optional to include in a Consignment Agreement?

1. Insurance: Insurance requirements and coverage details for valuable goods or when required by law

2. Marketing Rights: Terms for promoting consigned goods when consignee has marketing responsibilities

3. Exclusivity: Exclusive rights provisions for territorial or product exclusivity arrangements

4. Returns Policy: Handling of returned goods when dealing with retail consumers

What schedules should be included in a Consignment Agreement?

1. Schedule of Goods: Detailed list of consigned items, including descriptions and pricing

2. Commission Schedule: Detailed breakdown of commission rates and calculations

3. Operating Procedures: Specific procedures for handling, storing, and selling consigned goods

4. Insurance Certificates: Copies of required insurance documentation

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

United States

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Clauses
Industries

Uniform Commercial Code: Primary legislation governing consignment transactions, particularly Article 2 (Sales) and Article 9 (Secured Transactions). Critical for establishing security interests and regulating sales aspects of consignment arrangements.

State Commercial Laws: State-specific variations of the UCC implementation, including local consignment regulations and state-specific contract requirements that may differ by jurisdiction.

FTC Regulations: Federal Trade Commission rules governing fair business practices and consumer protection requirements applicable to consignment arrangements.

Tax Laws: Internal Revenue Code provisions, state and local tax obligations, and sales tax considerations specific to consignment transactions.

Bankruptcy Code: Federal bankruptcy provisions affecting consignor's rights in bankruptcy scenarios and protection of consigned goods when consignee faces insolvency.

Consumer Protection Laws: State and federal statutes protecting consumer rights, particularly relevant if the consignment arrangement involves retail sales to end consumers.

Insurance Requirements: State-mandated insurance coverage requirements and necessary protections for consigned goods during the consignment period.

Administrative Requirements: Record-keeping obligations, licensing requirements, local business regulations, and any industry-specific compliance requirements affecting consignment operations.

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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