A Consignment Agreement is essential when establishing a business relationship where goods are provided for sale without transferring ownership. This document, governed by U.S. commercial law, particularly the UCC, outlines crucial elements including payment terms, commission structures, risk allocation, and responsibilities of both parties. The agreement is commonly used in retail, art galleries, and various commercial settings where direct ownership transfer is not desired. It protects both the consignor's ownership rights and the consignee's right to compensation, while establishing clear operational procedures and liability frameworks. The agreement should be carefully structured to comply with both federal and state-specific requirements, particularly regarding security interests and bankruptcy protections.
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1. Parties: Identification of consignor and consignee with full legal details
2. Background: Context of the agreement and business relationship
3. Definitions: Key terms used throughout the agreement
4. Consignment Terms: Core terms including description of goods, pricing, and commission structure
5. Duration: Term of the agreement and renewal provisions
6. Title and Risk: Ownership rights and risk allocation
7. Payment Terms: Payment procedures, timing, and methods
8. Termination: Conditions for ending the agreement
1. Insurance: Insurance requirements and coverage details for valuable goods or when required by law
2. Marketing Rights: Terms for promoting consigned goods when consignee has marketing responsibilities
3. Exclusivity: Exclusive rights provisions for territorial or product exclusivity arrangements
4. Returns Policy: Handling of returned goods when dealing with retail consumers
1. Schedule of Goods: Detailed list of consigned items, including descriptions and pricing
2. Commission Schedule: Detailed breakdown of commission rates and calculations
3. Operating Procedures: Specific procedures for handling, storing, and selling consigned goods
4. Insurance Certificates: Copies of required insurance documentation
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