A consignment agreement is a contract between two parties: the consignor and the consignee. This agreement outlines the terms and conditions under which the consignee can market, display, and sell the consignor's goods in a particular territory. The consignor is the party that wants to sell certain goods in a specific region, while the consignee is a party with outlets in that territory willing to market, display, and sell goods on behalf of the consignor.

The agreement outlines several key terms and definitions, including those related to net sales price, business day, intellectual property, force majeure, and territory. It also specifies marketing and display requirements, such as allocating floor and wall space for the goods, preparing them for display, and placing them strategically. Additionally, the consignee agrees to promote and market the goods on a reasonable effort basis and to generally assist the consignor in the sale of the goods.

This consignment agreement is legally binding and includes provisions for termination, notice periods, and confidentiality. The agreement will remain in effect until either party terminates it, and both parties agree to keep confidential any proprietary or confidential information they may come into contact with during the course of their business relationship.

In conclusion, a consignment agreement is a valuable tool for businesses looking to expand their sales reach while minimising risk. By using a consignment agreement, the consignor can take advantage of the consignee's local knowledge and resources while maintaining control over the marketing and sale of their goods. Additionally, the consignee can increase their revenue stream by offering new products without incurring the risk of purchasing inventory upfront.

How to use this document?

How to Use a Consignment Agreement: A Step-by-Step Guide

1. Understand the Parties Involved: The agreement is between the Consignor (seller) and the Consignee (buyer) with their principal place of business mentioned in the agreement.

2. Interpret the Agreement: The agreement has various definitions such as Business Day, Force Majeure, Intellectual Property, Net Sales Price, Goods, Outlets, Quarter, and Territory.

3. Marketing and Display: The Consignor consigns the goods to the Consignee to market, display and sell in the Territory, subject to the terms and conditions of the agreement.

4. Marketing Campaigns: Marketing campaigns include but are not limited to email, media, and flyers. The Consignee agrees to cooperate with the Consignor in generating media interest.

5. Allocation of Floor and Wall Space: The Consignee agrees to allocate an appropriate space for the Consignor's goods, including well-lit space with appropriate spotlights and visible to passing traffic.

6. Consignee’s Duties: The Consignee has various duties, including promoting and marketing the Goods in the Territory and seeking orders for the Goods in the Territory on a reasonable effort basis.

7. Consignment Fee: The Consignee shall pay the Consignment Fee to the Consignor on a Quarterly basis.

8. Ownership of Goods: The Goods remain the property of the Consignor, and the Consignee shall have no right, title or interest in or to the Goods, except as expressly provided for in this Agreement.

9. Duration and Termination: The agreement shall commence on the date entered into the agreement and will continue for a period of one year. Either party may terminate the agreement by giving 30 days’ notice in writing.

10. Confidentiality: Both parties agree to keep confidential any information relating to the other party's business, which is not in the public domain.

In summary, this Consignment Agreement provides a clear outline of the relationship between the Consignor and Consignee for the sale of certain goods in a specific Territory. The agreement outlines the Consignee’s duties and obligations, the Consignment Fee, and the duration and termination of the agreement. Following this guide will help you understand the legal agreement and help you navigate the process smoothly.