What is a Consignment Agreement Review?
If you own goods and would like another party to sell them for you, a consignment agreement can help you to define the process.
This legal contract specifies the working relationship between the goods owner (or consignor) and a consignee, the party who agrees to sell them for a fee under specific terms. These terms must be clearly outlined in the agreement.
Once the agreement’s been drafted, you should carefully review it so that there’s no ambiguity or uncertainty in it.
Read the rest of this article for the core components to review in a consignment agreement, general tips for reviewing it, and to figure out if you should hire a qualified lawyer to conduct a legal review of your consignment agreement.
What are Key Terms to Review in a Consignment Agreement?
A consignment agreement usually contains key terms such as the following:
- Goods. Check that the agreement contains a detailed, clear description of the consigned goods. This can include mentioning their model and serial numbers.
- Ownership rights. The agreement must state that the consignor has rights to the goods until the buyer pays for them.
- Commission. Verify how much the consignee will earn for every sale.
- Responsibilities. Your agreement should specify parties’ duties so that they can align their expectations.
- Deadlines. To provide clarity, check that the consignee has a certain time period in which to sell the goods.
- Losses. Clarify which party is financially responsible for any losses or damages. This must be made transparent before they occur, reducing the risk of disputes.
- Reporting. It’s crucial to look for information about how inventory must be reported and how frequently.
What are Tips to Review a Consignment Agreement?
Since a consignment agreement requires clarity about both parties’ obligations, there are some important things to bear in mind when reviewing it.
Consider Unsold Goods
The consignment agreement should specify what happens to any items left unsold. Sometimes, the goods will go back to the owner, but this has to be stated so both parties are aware of what will occur.
Check Shipping Costs
If you’re dealing with a consignee who doesn’t live in your location, you should check that the agreement includes information about shipping expenses and how deliveries will occur. This provides clarity between parties and ensures smoother processes.
Verify a Sales Timeframe
It’s important to outline how much time the consignor has in which to keep the items, which is especially crucial to address in your agreement if you sell seasonal items. This can prevent the risk of unsold goods.
Confirm the Minimum Price
The minimum price in a consignment agreement is the lowest price the consignee must try to sell goods for. Should it happen that an item is sold for less, the consignor will still receive the amount they would have if the goods had been sold at the minimum price.
It’s important for the agreement to state that the consignee is responsible for any difference between the actual sales price and minimum price.
Should You Hire a Lawyer to Review a Consignment Agreement?
If you need to review a consignment agreement, it’s worth hiring a qualified lawyer to help you. Since a lawyer will explain all hidden risks and both parties’ rights, they’ll ensure that you’re protected and know what’s required.
A lawyer will help you by:
- Clarifying parties’ roles and responsibilities. A lawyer will explain all aspects of the agreement, such as the storage and selling of goods.
- Reviewing all payment terms. They’ll check commission, sales prices, and payment schedules. By ensuring clear payment terms, they’ll reduce payment issues or disputes.
- Protecting your ownership rights. By studying provisions about how ownership works before and after sales, a lawyer provides clarity.
- Consider how losses or damages are treated. They’ll specify which party takes the risk if something goes wrong.
- Spotting any hidden expenses. They’ll consider charges you might not think about, such as marketing and insurance costs.
- Negotiating any unfavorable terms. If required, a lawyer can use their experience and expertise to negotiate the agreement terms with the other party.
- Considering disputes and remedies. Should parties go to a dispute, such as because of a contract breach, a lawyer will include appropriate remedies and dispute-resolution methods.
- Making the agreement legally sound. A lawyer has experience in reviewing contracts for any missing legal provisions that could put you at risk and result in expensive legal problems in the future.
Where to Find a Lawyer for a Consignment Agreement Review
If you need to hire a lawyer to conduct a legal review of your consignment agreement, you should use an online legal platform to help you find one who’s reputable and experienced.
ContractsCounsel is one of the biggest online legal marketplaces. It connects you to a curated network of vetted lawyers. Instead of having to call traditional law firms in your area, you can quickly and conveniently match with the right lawyer.
When requesting a lawyer on the ContractsCounsel platform to review your consignment agreement, here are the steps to follow.
- Visit the ContractsCounsel marketplace.
- Post your project for free. Include a few details to help you find the most suitable lawyer.
- Wait for lawyer bids. Instead of receiving just one bid, you’ll receive multiple bids from lawyers directly on the platform who are ready to help you.
- Review the platform’s lawyer data. Go through the platform’s lawyer information, such as their location, client ratings for previous projects, expertise, and credentials.
- Connect with a lawyer you think is best suited to your requirements and hire them to review your consignment agreement for a flat fee.
