Is notarization required?

Not typically. Consignment Agreements generally do not require notarization to be valid. Certain transfers (vehicle title transfers, deeds) or state-specific practices may require notarization; verify local rules. Notarization can help with later evidentiary issues but is not a universal requirement.

Can this agreement be signed electronically?

Yes, provided the signature meets ESIGN Act standards (15 U.S.C. ch. 96) and applicable state UETA rules. Confirm any consumer-facing disclosures required by 15 U.S.C. §7001(c). Exceptions like wills are not eligible for standard e-signature treatment.

Who pays for insurance and loss?

The agreement must state whether consignor or consignee bears loss and insurance costs. Absent a clause, courts may interpret risk allocation differently; specify coverage limits and claim procedures to avoid disputes.

How do I terminate the agreement early?

Follow the termination clause: provide required notice, specify return logistics for unsold goods, and settle outstanding payments. If the contract is silent, reasonable notice and mutual agreement are typically required.

What happens to unsold items?

The agreement should require a return window, disposal or markdown procedures, and responsibility for storage costs. If not specified, parties risk disagreement over custody and charges.

Who may sign on behalf of a business?

An authorized officer, manager, or person with delegated authority should sign. Verify signing authority with a corporate resolution or letter to avoid later challenges to enforceability.

Consignment Agreement

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CONSIGNMENT AGREEMENT

Parties and Recitals

This Consignment Agreement (the Agreement) is made effective as of by and between:

Consignor Name: Consignor Address: Consignee Name: Consignee Address:

WHEREAS, Consignor is the lawful owner of certain goods described in the inventory schedule below and desires to place such goods with Consignee on consignment for sale; and

WHEREAS, Consignee is engaged in the business of selling goods of the type described herein and agrees to accept possession of the goods on consignment subject to the terms and conditions set forth in this Agreement; and

WHEREAS, the parties wish to set forth their respective rights and obligations with respect to the consigned goods and the proceeds of sale.

Definitions

For purposes of this Agreement: "Goods" means the items consigned by Consignor to Consignee pursuant to the inventory schedule; "Net Proceeds" means gross sale proceeds less authorized deductions as set forth in Payment Terms.

Scope of Consignment

Consignor delivers and transfers physical possession of the Goods to Consignee for the purpose of sale on consignment. Consignee shall exercise reasonable care in storing and displaying the Goods and shall sell the Goods only on the terms authorized in this Agreement.

Inventory Description and Schedule (attach additional pages if necessary):

Payment Terms

Consignee will remit to Consignor the agreed share of Net Proceeds in accordance with the schedule below. All sums are payable in United States Dollars unless otherwise agreed in writing.

Consignor Share of Net Proceeds (percentage): Minimum Guaranteed Payment (if any): Payment Schedule / Settlement Period: Late Payment Fee:

Deductions authorized prior to calculating Net Proceeds include reasonable fees for sale commission, storage, repair or restoration necessary to make Goods saleable, transaction fees, and sales taxes imposed on the transaction. Consignee shall provide an itemized statement with each remittance.

Title, Risk of Loss and Insurance

Title to the Goods remains with Consignor until the time of sale to an end purchaser. Risk of loss or damage to the Goods while in Consignee's possession shall be borne by as provided below.

Consignee shall maintain insurance covering the Goods while in its possession in an amount sufficient to cover the agreed value declared by Consignor on the inventory schedule or, if no amount is declared, the reasonable market value of the Goods. Proof of insurance shall be provided to Consignor upon request.

Term and Termination

This Agreement shall commence on and shall continue until unless earlier terminated in accordance with this section.

Either party may terminate this Agreement for convenience upon days' prior written notice to the other party. Upon termination, Consignee shall: (a) cease further sale efforts; (b) return unsold Goods to Consignor within a commercially reasonable time; and (c) remit any outstanding Net Proceeds within the Settlement Period described above.

Confidentiality

Each party shall keep confidential all non-public information received from the other party in connection with this Agreement, including but not limited to pricing, customer lists, inventory valuations and sales data, and shall not disclose such information except as required by law or as necessary to perform obligations under this Agreement. Confidential obligations survive termination for a period of three (3) years.

Representations, Warranties and Indemnity

Consignor represents and warrants that it holds good and marketable title to the Goods, that the Goods are free of liens and encumbrances, and that Consignor has full authority to consign the Goods. Each party shall indemnify and hold the other harmless from any third-party claims arising out of the indemnifying party’s breach of its representations or obligations under this Agreement.

Limitation of Liability

Except for willful misconduct or gross negligence, neither party shall be liable to the other for consequential, incidental, special or punitive damages. The aggregate liability of either party arising out of this Agreement shall not exceed the total Net Proceeds actually received by Consignor with respect to the Goods at issue.

Notices

Notices under this Agreement shall be delivered in writing to the addresses set forth above or to such other address as a party may designate by notice in accordance with this section, and shall be effective upon receipt.

Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to conflict of laws principles. The parties submit to the exclusive jurisdiction of the courts located in that state for any disputes arising from this Agreement.

Entire Agreement; Amendments

This Agreement constitutes the entire agreement between the parties with respect to the consigned Goods and supersedes all prior negotiations, representations and agreements. Any amendment or waiver must be in a written instrument signed by both parties.

Miscellaneous

If any provision of this Agreement is held unenforceable, the remaining provisions shall remain in full force and effect. Neither party may assign this Agreement without the prior written consent of the other, except to a successor in interest of substantially all assets.

Execution

By signing below, each party certifies that it has authority to enter into this Agreement, that the information provided herein is true and accurate, and that it agrees to be bound by the terms and conditions herein.

Consignor - Printed Name:

By:

Date:

Consignee - Printed Name:

By:

Date:

What a Consignment Agreement Covers

A Consignment Agreement is a contract where an owner (consignor) delivers goods to another party (consignee) to hold, display, and sell on the consignor’s behalf. The agreement allocates title, risk, fees or commissions, reporting duties, timelines for return of unsold goods, and termination rights. It clarifies who bears storage, insurance, and shipment responsibilities while the goods remain unsold. Consignment Agreements are used across retail, art, automotive, and B2B resale contexts and can be executed electronically when parties meet ESIGN and UETA requirements.

Why a Clear Consignment Agreement Helps Both Parties

A concise Consignment Agreement reduces disputes by setting payment schedules, sale reporting, insurance obligations, and end-of-term handling. It protects ownership rights, defines commission rates, and assigns liability for loss or damage during consignment.

Who Commonly Uses Consignment Agreements

Consignment Agreements are used by sellers who want to market goods without transferring title immediately and by businesses that sell on behalf of owners for a fee.

Independent retailers and secondhand stores that accept items and pay consignors a percentage after sale.
Galleries and auction houses that sell artwork or collectibles on behalf of owners.
Vehicle dealers and brokers who handle consigned cars or specialty equipment for private owners.

Parties choosing consignment should confirm commercial terms, insurance, and termination procedures up front and document them in a written agreement.

Core Clauses to Include in a Professional Agreement

A robust Consignment Agreement reduces ambiguity. Include precise definitions, payment mechanics, risk allocation, inspection and reporting obligations, timelines for unsold items, and clear termination and dispute-resolution paths.

Parties

Identify consignor and consignee with full legal names, business types, and contact details so liability and notices are unambiguous.

Goods Description

Describe items with serial numbers, quantities, condition, photos, and SKU or inventory identifiers to avoid later disputes over what was consigned.

Term

State the start and end dates or criteria for return, and specify notice periods for early termination to govern custody and sale timing.

Compensation

Describe commission percentage, payment timing, deductions (fees, returns), and accounting frequency for transparent settlement procedures.

Risk and Insurance

Allocate responsibility for loss, theft, and damage, require minimum insurance levels if appropriate, and specify who files claims.

Returns & Unsold Goods

Set deadlines and logistics for returning unsold items, restocking fees if any, and procedures for disposal or markdown after a specified period.

Step-by-Step: Completing a Consignment Agreement

Follow these steps to prepare and sign a clear, enforceable Consignment Agreement.

01

Draft Terms: Define goods, commission, term, and insurance clearly.
02

Confirm Identities: Verify legal names and business registrations for both parties.
03

Attach Exhibits: Include inventory lists, photos, and price schedules as exhibits.
04

Sign and Date: All parties sign and date; record effective date and witness/notary if required.

Typical Electronic Workflow for Signing

An eSignature workflow speeds execution while maintaining an audit trail. The typical flow is simple and repeatable.

Upload Document: Add the agreement PDF or DOCX to the eSignature platform.
Place Fields: Drag signature, date, and initial fields where each party must act.
Send to Signers: Enter signer emails or generate secure links for recipients.
Capture Audit Trail: Platform logs timestamps, IP addresses, and signer actions.

Recommended eSigning Configuration for Consignment Files

Set up fields and authentication to match the agreement’s risk level and recordkeeping needs.

Field	Configuration
Signer Order	Consignor signs first, consignee signs second if needed
Authentication	Email verification or SMS code for moderate assurance
Field Types	Signature, date, initials, checkbox, and attachment for photos
Notifications	Auto reminders at 3, 7, and 14 days after send

Platform and Integration Considerations

Choose a signing platform that supports audit trails, secure storage, and your preferred integrations to avoid manual reconciliation.

CRM Integration: Salesforce, NetSuite, Microsoft Dynamics supported
Storage Options: Box, Google Drive, and Egnyte available
File Types: PDF, DOCX, and HTML accepted

Integrations streamline inventory updates and payment reconciliation; confirm API or connector availability before deploying high-volume workflows.

Comparing eSignature Vendors for Consignment Workflows

Below is a neutral pricing and feature snapshot for common eSignature vendors to help evaluate cost and compliance trade-offs.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial, no credit card	Yes	Yes	Yes, limited	Yes, limited
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Security and Compliance Features to Verify

In-Transit Encryption: TLS 1.2/1.3

At-Rest Encryption: AES-256

Audit Trail: Immutable timestamp and IP logs

HIPAA Support: BAA available

Regulatory Certifications: SOC 2 Type II, ISO 27001

eSignature Law: ESIGN and UETA compliance

Common Risks and Legal Consequences

Tax Reporting: Penalties for incorrect forms

Loss Liability: Disputed responsibility for damaged goods

Breach Disputes: Claims over commission or returns

Unclear Title: Conflicts about ownership after sale

Unauthorized Sales: Claims for improper disposition

Unenforceable Terms: Ambiguous clauses may be void

Frequent Preparation Mistakes to Avoid

Failing to inventory and photograph goods before transfer, which makes later condition disputes difficult to resolve.
Leaving payment and deduction terms vague, creating disagreement over commission calculation or allowable expenses.
Neglecting insurance language or required coverage levels, which shifts unexpected loss risk onto the wrong party.
Not specifying return logistics and deadlines for unsold goods, leading to storage disputes and increased costs.

Real-World Consignment Scenarios

Two examples illustrate typical consignment workflows and contractual adjustments for different sectors.

Art Gallery Example

A gallery accepted a sculptor’s work with a 60-day sale term and 40% commission

The gallery insured items and provided monthly sales reports
The consignor received payment 30 days after sale and the agreement required photo records to confirm condition at acceptance and return.

Automotive Consignment Example

A used-car dealer listed a private owner’s vehicle with a fixed reserve price

The dealer collected offers and remitted net proceeds after sale
The contract specified title transfer mechanics, who paid registration fees, and liability for test-drive accidents.

Key Dates and Timing to Specify

Define the dates and deadlines that control custody, reporting, and payment to prevent ambiguity.

Effective Date:

Enter the start date of obligations (MM/DD/YYYY).

Inspection Window:

Specify time for consignor to inspect goods after delivery.

Return Deadline:

State the number of days before unsold goods are returned, e.g., 90 days.

Payment Timing:

Define when commissions are paid, e.g., 30 days post-sale.

Reporting Frequency:

Set accounting cadence, e.g., monthly statements within 15 days.

Milestone Timeline for a Typical Consignment

Track milestones from delivery through sale and settlement to ensure obligations are met on time.

01

Delivery

Consignor delivers goods and documents condition and inventory.

02

Acceptance

Consignee inspects and acknowledges receipt of items.

03

Listing Period

Items are displayed or marketed during the agreed term.

04

Settlement

After sale, consignee remits proceeds minus commission and fees.

How a Consignment Agreement Differs from Similar Documents

Compare common document types that are sometimes confused with consignment arrangements.

Document Type	Purpose	Title Transfer
Consignment Agreement	sale on behalf of owner	title stays with consignor until sale
Bill of Sale	immediate transfer of ownership	title transfers at sale
Consignment Inventory Agreement	goods provided for resale or use	title often retained by consignor
Brokerage Agreement	agent procures buyer	title transfer depends on contract

Frequently Asked Questions About Consignment Agreements

Answers to common legal and practical questions about preparing, signing, and enforcing Consignment Agreements.

Need help? Contact support

Is notarization required?
Not typically. Consignment Agreements generally do not require notarization to be valid. Certain transfers (vehicle title transfers, deeds) or state-specific practices may require notarization; verify local rules. Notarization can help with later evidentiary issues but is not a universal requirement.
Can this agreement be signed electronically?
Yes, provided the signature meets ESIGN Act standards (15 U.S.C. ch. 96) and applicable state UETA rules. Confirm any consumer-facing disclosures required by 15 U.S.C. §7001(c). Exceptions like wills are not eligible for standard e-signature treatment.
Who pays for insurance and loss?
The agreement must state whether consignor or consignee bears loss and insurance costs. Absent a clause, courts may interpret risk allocation differently; specify coverage limits and claim procedures to avoid disputes.
How do I terminate the agreement early?
Follow the termination clause: provide required notice, specify return logistics for unsold goods, and settle outstanding payments. If the contract is silent, reasonable notice and mutual agreement are typically required.
What happens to unsold items?
The agreement should require a return window, disposal or markdown procedures, and responsibility for storage costs. If not specified, parties risk disagreement over custody and charges.
Who may sign on behalf of a business?
An authorized officer, manager, or person with delegated authority should sign. Verify signing authority with a corporate resolution or letter to avoid later challenges to enforceability.

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