A consignor provides the goods to a consignee. The consignee sells these goods to customers. This is advantageous in situations where a consignor does not wish to deal with customers directly. Another advantage is that title for the goods does not pass onto a consignee.

How does a commercial Consignment Agreement work?

A consignment is when the consignor delivers their property to the consignee so that the consignee can sell the property. While the property is in the consignee’s possession, the consignor still retains ownership of the property. The property, or goods, will only become the final customer’s property after the consignee sells it. 

This means you can request that your goods be returned to you at any point during the commercial relationship. For example, one such term would outline that you’ll remain the owner of your goods until your consignee confirms that the goods have been sold to another customer.

So to be a ‘commercial consignment’, the contract must meet the criteria as per the Personal Property Security Act 2009 (Cth). The contract will be a commercial consignment if:  

• The consignor retains an interest in the goods that have been delivered to the consignee.
• They delivered the goods for the purposes of sale, lease, or another form of disposal.
• Both the consignor and consignee deal with these goods in the ordinary course of their businesses.

What are the benefits of a commercial Consignment Agreement?

There are a range of benefits from using a Consignment Agreement instead of selling the goods yourself. The benefits for a consignor include:

• Provides the consignor with a security interest – A security interest will secure the consignor’s rights if the consignee defaults on their obligations, such as through becoming insolvent. To ensure you receive this protection, make sure to register your interest under the terms of the PPSA 
• Provides a mechanism for the sale of high value or unusual goods
• Allows for consignees to have possession to sell the goods without causing significant risk to the consignor
• Another party will do the majority of the work finding a buyer
• If a buyer isn’t found, they can organise for their goods to be returned to them
• There are no restrictions on what goods can be sold using a Consignment Agreement  
• They will retain ownership of their goods while a buyer is being found
• In the case of an agency sale, they can still maintain control over the final sale price of the goods

Use this Consignment Agreement if:

• You wish to have a consignee sell goods for you, or
• You wish to sell goods on behalf of the consignor

What does this Consignment Agreement cover?

• Agreement to sell
• Events upon sale
• Sale or return
• Title
• Risk
• Consignees obligations in relation to Goods
• Personal Property Securities Act (Cth) 2009 (PPSA)

Further information:

• What Is Commercial Consignment?
• How Do Consignment Agreements Work?