CHAPTER 20
Consignment Agreement IN A CONSIGNMENT CONTRACT,
the owner of products gives possession of them to another party, who sells them. Until the goods are sold, they remain the property of the owner (known as the consignor). Title to the goods never passes to the person selling them (the consignee). The risk that the products will not sell remains with the consignor because unsold or outdated products can usually be returned. Thus, the consignment contract differs from the distribution contract, where the goods are purchased by the distributor and resold, and from the sales representative contract, where the goods are sold on behalf of the manufacturer but usually are shipped directly from the manufacturer to the customer (and therefore are never possessed by the sales representative).
Sample Contract: Consignment Agreement This Agreement is made on [date] between [name], [a/an] [individual or type of entity and nationality or place of formation] of [address] (the “Manufacturer”), and [name], [a/an] [individual or type of entity and nationality or place of formation] of [address] (“Consignee”).
The agreement binds the parties who sign it, and these should be identified here. To ensure that there is no misunderstanding, the full name and business address of each party should be given. If a party is an entity (partnership, corporation, limited company, or otherwise), the type of entity should be disclosed here. In international contracts, the description of each party includes the party’s nationality. Examples of descriptions: “a Société Anonyme organized and existing under the laws of France,” “a partnership organized and existing under the laws of the State of California in the United States of America,” or “an individual who is a citizen of Singapore.”
COMMENT:
RECITALS A.The parties acknowledge that the Manufacturer produces and sells [describe goods or the goods listed in the Current Product List attached to this Agreement] and future products that are similar in nature and type (the “Goods”). B. The Consignee has requested to receive Goods on consignment from the Manufacturer for the purpose of stocking and selling the Goods as an authorized representative of the Manufacturer. C.The Manufacturer desires to furnish Goods to the Consignee as an authorized representative in [state and/or country] (“Territory”) on the terms and conditions of this Agreement.
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