What does a consignment agreement cost? You may ask this question if you need a consignment agreement to sell goods. Let’s explore this question and review some general information about consignment agreements and when they are used.
How Much Does a Consignment Agreement Cost?
A consignment agreement is a legally binding contract that allows a consignee (the seller) to sell an item for the consignor (the owner). While most people think about selling items when they hear consignment, a consignment agreement can also be used for things such as:
- Storage of an item or commodity
- Transfer of an item or commodity
- Use of an item or commodity
When executing a consignment agreement, the consignee accepts an item from an owner with the intent of selling the item to a potential buyer. If the item sells, the consignee collects a commission on the sale. If the item doesn’t sell, it is returned to the owner.
Consignment agreements can be complex documents and must include specific legal terms to protect both the consignor and the consignee. Some topics a consignment agreement should cover include:
- Description of the items
- Length of time to sell the items
- Amount of commission
- How are the items returned if they don’t sell
For this reason, it is common to have a licensed attorney draft a consignment agreement.
A lawyer with experience with consignment agreements will know what terms and conditions must be included to make the contract legally binding and adhere to applicable state and local laws concerning consignment agreements.
Based on ContractsCounsel’s marketplace data, the average cost of a consignment agreement is $820 across all states and industries.
What is Included in a Consignment Agreement?
Consignment agreements will vary based on the products and goal of consignment, whether that be a sale, storage, or use. Therefore, these contracts can be easily customized and negotiated.
Although the contents and details of a consignment agreement will vary, every agreement should include the following basic information:
- Parties: Every consignment agreement should clearly state the parties are entering the contract and designate who is the consignor and the consignee.
- Consigned Goods: The agreement must have a description of the item or goods that are being sold. The description should be as detailed as possible, including amount, serial numbers, model numbers, initial retail price, and current retail price.
- Delivery of Goods: This section states that property is being provided on a consignment basis and explains the risk that the consignor bears in delivering the product, such as loss or damage.
- Consignment Period: The consignment period is the length of time the consignee has to sell the goods. Some agreements will include an automatic extension if the good isn’t sold.
- Efforts to Sell: Efforts to sell describe the consignee’s obligations to sell the goods and set clear expectations that the consignor can have of the consignee.
- Title to Products: A consignment agreement must outline which party maintains ownership of the goods throughout the transaction. Even though the consignee is tasked with selling the goods, the consignor maintains ownership of them until they are sold.
- Payment and Commission: Commission is the percentage of the sale the consignee is entitled to for their work making the sale. This sales commission agreement must be approved by both parties and clearly stated in the contract.
- Risk of Loss/Damage: When a consignee takes possession of the consignor’s goods, they take responsibility for them. This section will include any penalties for losing or damaging consignment property.
- Return of Products: This section allows the consignor to request a return of their property.
A consignment agreement can include any additional terms the parties see fit for their business transaction. You should always consult with your attorney to ensure your contract doesn’t miss any key information.
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Consignment Agreement Drafting
Consignment agreements are important legal contracts and must be drafted to protect both the consignor and consignee’s interests. Either party can provide the contract, but only a licensed attorney will know what terms to include and how to best draft this agreement.
Before beginning the draft for a consignment agreement, a lawyer will meet with their client (either the consignor or the consignee) to go over the terms and conditions they want to include in the contract. Once the lawyer understands what needs to be in the contract, they can begin drafting.
Consignment Agreement Review
When a party signs a consignment agreement, they are taking a risk. A consignor is giving their property to another person to sell, and a consignee is taking responsibility for the property. Therefore, before signing this contract, it is important to have it reviewed by a lawyer.
A lawyer will review the consignment agreement to ensure that it is fair, protects both parties, and is legally binding. Some states may have specific laws that govern consignment agreements, so the agreement must adhere to all local laws.
Consignment Agreement Drafting Cost
A lawyer hired to draft a consignment agreement will charge the client for their time and services. This can include:
- The initial consultation
- Hours spent drafting the agreement
- Revisions
- Follow-up meetings
ContractsCounsel’s marketplace data shows the average consignment agreement drafting costs are $930 across all states and industries.
Consignment Agreement Review Cost
Suppose the consignor or consignee hires a lawyer to review their consignment agreement. In that case, they will be responsible for their own legal fees. However, review costs are generally less than drafting costs because they require less time from the lawyer.
ContractsCounsel’s marketplace data shows the average cost to review a consignment agreement is $760 across all states and industries.
How Do Lawyers Charge for Consignment Agreements?
Hourly Rates for Consignment Agreements
An hourly rate billing structure is common for most lawyers, especially if the project they are hired to complete is time-consuming or complicated. When an attorney bills by the hour, they charge a client a set rate for each hour spent working on a project.
Hourly fee agreements ensure that lawyers are compensated for all their time working on a particular task.
ContractsCounsel’s marketplace data shows the average hourly rate for a consignment agreement lawyer ranges from $150 - $300 per hour.
Flat Fee Rates for Consignment Agreements
A lawyer may use a flat fee rate billing structure for less complicated projects and cases. For example, when a lawyer is hired for a specific project, like drafting a consignment agreement, they can estimate how long the task will take to complete and quote the client a flat fee.
Flat rate fees are typically paid upfront before the lawyer begins work on the project. For clients, flat fee rate structures are beneficial because they know exactly how much their legal fees are from the project's beginning.
ContractsCounsel’s marketplace data shows the average flat fee rate for a consignment agreement is $820.
Get Help with a Consignment Agreement
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