How to Write a Consignment Agreement?

consignment agreement template

A consignment agreement is an understanding between a recipient and distributor for the capacity, transfer, deal, or resale and utilization of an item. The proctor may take merchandise from the relegation stock for use or resale subject for installment to the agent agreeing to the terms dealt in the consignment agreement. The unsold merchandise will usually be returned by the consignee to the consignor. It can be a simple agreement for equipment or even vendor agreement.

A Consignment Agreement should be written properly because this is where your business will depend and have the basis if someday one of both parties will have an argument. The agreement between two parties will serve as proof of the terms and conditions that you both have agreed upon. We have prepared the steps below for you to have a guide in writing your consignment agreement.

1. Begin with the Basic Information

The basic information consists of the date and the individual or company name of both parties. The date should be written at the topmost of the page. The names will be written in this format "This contract is between (individual or company name) and (individual or company name)". If you want to include other identifying details like the person's job position or business classifications, then add it after the names. Usually, your client will write the shop's name instead of his name. It means that its the shop that is having a business agreement with you and not the owner.

2. Write all the Contract Terms

Your legal contract agreement should have all the things that both parties have agreed to. These include the price of the item, the duration of the item will be kept, and who will be at fault if anything will happen at the items. According to investopedia.com, a seller of a consignment shop may accept 25% to 60% of the sales in consignment fees depending on the items sold. For you to reach this amount of sales, you should consider each price of the item properly.

3. Add Details

Writing the details of each item on your legal agreement should be understandable and well-described. This will help avoid confusion between both parties when talking about the exchanged items. Describing each item will include its color, size, style, brand, and other specific details. Be sure to write additional details that are different from other items to prevent confusion for similar items. Never forget to describe even one item so that you will not have any problems during inventory.

4. Describe the Contract Termination

In every contract or agreement, it contains when it will come to its end. In this part, explain when and how the contract will last. You can specify that the simple agreement will end if all the items are sold or the duration of time the store will be holding each item. Also, add the possible consequences if one of the parties will violate the terms and conditions stated in the contract.

5. Save the Last Page for Signing

Reserve the last page and write the name of both parties and the date you both have signed the sales agreement. After you and the other party have read through the whole contract and already agreed on all the terms and conditions, sign the contract. Make sure that both parties have understood the contents of the contract before signing to avoid complications in the business.

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