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Consignment Agreement Template for Malaysia

A comprehensive legal document governed by Malaysian law that establishes a consignment arrangement between a consignor (supplier) and a consignee (retailer/dealer). The agreement outlines the terms and conditions under which the consignee will receive, store, display, and sell goods on behalf of the consignor while maintaining the consignor's ownership until sale. It addresses key aspects including commission structures, payment terms, risk allocation, reporting requirements, and operational procedures, all within the framework of Malaysian commercial law, particularly the Contracts Act 1950 and Sale of Goods Act 1957.

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What is a Consignment Agreement?

The Consignment Agreement is essential for businesses in Malaysia looking to establish a commercial arrangement where one party (consignor) provides goods to another party (consignee) for sale without transferring ownership until the actual sale occurs. This document is particularly relevant in retail, wholesale, and distribution sectors where suppliers want to maintain ownership of goods while leveraging another party's sales channel or market presence. The agreement must comply with Malaysian legal requirements, including the Contracts Act 1950 and Sale of Goods Act 1957, and typically includes detailed provisions for inventory management, commission structures, payment terms, and risk allocation. It's commonly used when businesses want to test new markets, manage seasonal inventory, or establish presence in retail locations without direct investment in inventory.

What sections should be included in a Consignment Agreement?

1. Parties: Identifies and provides full details of the consignor and consignee

2. Background: Explains the context of the agreement and the parties' intentions regarding the consignment arrangement

3. Definitions: Defines key terms used throughout the agreement

4. Appointment and Scope: Details the appointment of the consignee and scope of the consignment arrangement

5. Delivery and Storage of Goods: Specifies terms for delivery, acceptance, and storage of consigned goods

6. Sale of Consigned Goods: Details the terms and conditions for selling the consigned goods

7. Pricing and Commission: Specifies the pricing mechanism for goods and commission structure

8. Payment Terms: Outlines payment procedures, timing, and methods

9. Title and Risk: Clarifies ownership of goods and allocation of risk

10. Representations and Warranties: States the parties' representations and warranties regarding the goods and their authority

11. Recordkeeping and Reporting: Specifies requirements for maintaining records and reporting sales

12. Term and Termination: Defines the duration of the agreement and termination provisions

13. General Provisions: Contains standard legal provisions including governing law, notices, and dispute resolution

What sections are optional to include in a Consignment Agreement?

1. Insurance: Required when specific insurance arrangements need to be detailed, particularly for high-value goods

2. Marketing and Display: Include when there are specific requirements for how goods should be marketed and displayed

3. Exclusivity: Add when the consignment arrangement is exclusive for certain territories or products

4. Return of Goods: Include when specific provisions for returning unsold goods need to be detailed

5. Intellectual Property: Required when the consigned goods involve trademarks, patents, or other IP rights

6. Compliance with Laws: Add when specific regulatory compliance requirements need to be addressed

7. Force Majeure: Include when specific force majeure provisions are needed beyond standard provisions

8. Confidentiality: Add when sensitive information will be shared between parties

What schedules should be included in a Consignment Agreement?

1. Schedule 1 - Consigned Goods: Detailed list and description of goods covered by the agreement

2. Schedule 2 - Commission Structure: Detailed breakdown of commission rates and calculation methods

3. Schedule 3 - Operating Procedures: Specific procedures for handling, storing, and selling consigned goods

4. Schedule 4 - Reporting Templates: Templates for required sales reports and inventory records

5. Schedule 5 - Territory: Definition of geographical area or locations covered by the agreement

6. Appendix A - Quality Standards: Standards for maintaining and handling consigned goods

7. Appendix B - Return Procedures: Procedures for returning unsold or damaged goods

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Malaysia

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use

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