Can a consignment agreement be signed electronically?

Yes. Electronic signatures are generally enforceable under the ESIGN Act (15 U.S.C. §7001) and UETA in most states, provided intent, consent, attribution, and record retention requirements are met.

Do consignors need to provide a W-9?

Provide a W-9 when requested by a payer to ensure correct taxpayer identification. Failure to supply a correct TIN can trigger 24% backup withholding per IRS rules.

Who is responsible for insurance and loss?

The agreement should specify whether consignor or consignee insures goods and at what coverage level. Absent clear allocation, state contract law and the written terms govern loss allocation.

Is notarization required for validity?

Most consignment agreements do not require notarization to be valid, but notarization or witnesses may be required for recording or for specific state law purposes—check local rules.

How can a party cancel or revoke the agreement?

Follow the termination clause: provide required notice, arrange return of unsold goods per terms, and reconcile outstanding payments. Document the process in writing to avoid future disputes.

What if inventory reconciliation reveals shortages?

Use the contract’s inspection, audit, and dispute resolution clauses. If reconciliation confirms shortages, remedies typically include replacement, reimbursement, or damage offsets per the agreed procedure.

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Consignment Sales Agreement

Consignment Sales Agreement

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Consignment Agreement Regarding Retail Sales through Internet Website

Consignment Agreement made on the between

, a corporation organized and existing under the laws of the state of , with its principal office located at

, referred to herein as Consignor, and

, a corporation organized and existing under the laws of the state of , with its principal office located at

, referred to herein as Seller.

For and in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Consignor does now grant to Seller, and authorizes Seller to sell, the Property listed in Exhibit A attached hereto (the Property) by private or public retail sale on the terms and conditions as set forth in this Agreement.

2. Consignor warrants and represents to Seller that:

A. Consignor's title to the Property is marketable and insurable;

B. Consignor has the full power and authority to enter into this Agreement, that Consignor has the full right and authority to convey title to the Property to any duly authorized buyer;

C. Consignor has consent from any secured lender authorizing the sale of the Property and that Agreements are in place with any lender for the release of any security Agreements.

3. Consignor indemnifies Seller for any claims brought by third parties based on Consignor's failure to disclose the existence of any security agreements or secured claims against the Property, such indemnity to include reimbursement for any attorney's fees and cost incurred by Seller in defense of any such claim.

4. Consignor authorizes Seller to place the Property in the online retail store, , located at . Seller may seek to combine lots if, in the opinion of Seller, doing so will increase the marketability and value of the Property. If Seller wishes to combine lots, Seller will notify Consignor and Consignor will have the right to withdraw the Property without penalty.

5. Consignor agrees to pay Seller for the Seller finding a purchaser who is ready, willing, and able to purchase the Property, Seller placing the Property in its catalog, and Seller billing and collecting payment from the purchaser of the Property. Consignor will be charged a commission on each lot sold. The commission will be deducted from the proceeds that Consignor will receive from the sold lots. Consignor's commission will be of the sale price, or $, whichever is higher. Consignor will be charged no other fees for the sale of the Property.

6. Consignor may place asking prices on all of the Property in the consignment. All asking prices must be recorded by Consignor on the lot list attached as Exhibit A to this Agreement. If no asking price is indicated, Seller shall designate its own, based on Seller's knowledge and experience of current market values. Consignor may change the asking prices at any time by notifying Seller in writing (by e-mail or regular U.S. mail). Consignor agrees to hold Seller harmless should a lot sell below their expectations where no asking price was indicated.

7. Consignor has the right to withdraw any of the Property, until such time as the Property has been photographed for the catalog. Should the Consignor withdraw a lot after it has been photographed, then Consignor will be charged $ per lot. Consignor shall pay to Seller shipping and handling costs before the Property is returned.

8. Consignor agrees that Seller is the sole owner of all photographic images of the lots. Consignor grants to Seller an exclusive right to use the photographic and images as Seller sees fit, in perpetuity.

9. Seller will make every reasonable effort to collect the payment from the purchaser of the Property. Seller will not release the Property to the purchaser until Seller has complete payment on the Property. Consignor agrees that should a purchaser fail to remit payment on Property sold, then Seller will relist the Property.

10. Seller will settle Consignor's account on or about the day of each month, provided at least $ is due the Consignor (unless there is no more Property to sell, in which case, the balance due will be issued.)

11. Consignor represents to Seller that the Property is not a reproduction and has not been repaired, unless this fact is recorded on the attached Exhibit A lot list. If the Property is a reproduction or has been repaired, and Consignor does not record this on the lot list, and the Property is sold, and the purchaser refuses to accept the Property, then the Property will be returned to Consignor. Consignor will be responsible for payment of Consignor commission, and all shipping costs associated with shipping the lot between the purchaser, Seller, and Consignor, before the Property is returned.

12. Consignor and Seller agree that they have had the opportunity to review this Agreement and have had an opportunity to be advised as to its contents, requirements, and liabilities, and have signed this Agreement fully understanding their respective rights, responsibilities, and obligations under the Agreement.

13. Severability

The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision.

14. No Waiver

The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.

15. Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of .

16. Notices

Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement.

17. Attorney’s Fees

In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees.

18. Mandatory Arbitration

Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect.

19. Entire Agreement

This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.

20. Modification of Agreement

Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party.

21. Assignment of Rights

The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.

22. In this Agreement, any reference to a party includes that party's heirs, executors, administrators, successors and assigns, singular includes plural and masculine includes feminine.

WITNESS our signatures as of the day and date first above stated.

(Name of Consignor)

(Name of Seller)

By:

What a Consignment Sales Agreement Is and When It Applies

A Consignment Sales Agreement is a contract where one party (the consignor) delivers goods to another party (the consignee) to sell on the consignor’s behalf. The agreement defines ownership, inventory control, pricing or commission splits, terms for unsold goods, payment timing, insurance responsibilities, and termination conditions. It allocates risk for loss or damage, describes reporting and audit rights, and sets the scope of authority for pricing and returns. Consignment arrangements can be short-term or ongoing and often require clear inventory and payment controls to avoid disputes.

Why Having a Clear Consignment Sales Agreement Matters

A written agreement reduces disputes by documenting who owns goods, how sales proceeds are split, timelines for payment, and return conditions. It clarifies liability for loss and sets inspection, reporting, and termination rules, protecting both consignor and consignee.

Who Typically Uses a Consignment Sales Agreement

Consignment agreements are used by sellers and intermediaries who want to place goods for sale without immediate transfer of title.

Consignors (manufacturers, artisans) — Owners supplying goods to third-party sellers for retail or auction sales, retaining title until sold.
Consignees (retailers, marketplaces) — Stores or platforms that display, market, and sell goods on behalf of consignors under agreed terms.
Intermediaries (auction houses, brokers) — Parties that manage sales, settlement, and logistics for both consignor and consignee.

The agreement should match the relationship: high-volume retail consignment needs stronger inventory controls, while one-off consignments may focus on pricing and return logistics.

Primary Parties and Signing Authorities

Consignor

Typically the goods owner or manufacturer. Responsible for accurate product description, title clarity, and any warranties. Signs to confirm consignment terms and reserves rights over unsold inventory until sold.

Consignee

Usually a retailer, marketplace operator, or auctioneer. Accepts goods for sale, maintains inventory records, remits proceeds per the agreement, and signs to accept custody and payment obligations.

Security and Compliance Basics for Consignment Documents

Encryption: TLS 1.2/1.3 in transit

Data at Rest: AES-256 encrypted storage

Audit Trail: Comprehensive signing logs

Authentication: Email, SMS, or stronger

HIPAA Support: BAA available when required

Standards: SOC 2 Type II and ISO-27001

Common Legal and Financial Risks

Breach Damages: Liability for lost sales

Inventory Loss: Consignor bears title risk

Tax Exposure: Backup withholding risk

Late Payments: Interest or collection fees

Contract Ambiguity: Disputes over splits

Regulatory Noncompliance: State law penalties

Frequent Preparation Errors to Avoid

Vague ownership language leaving title transfer unclear, which can create disputes if goods are lost or damaged.
Undefined payment timing or deductions, causing confusion about when consignor receives proceeds and who pays fees.
Insufficient inventory controls or reporting requirements, which makes reconciliation and auditing difficult for consignors.
No written procedure for unsold goods return or disposal, increasing the risk of unreturned stock and revenue loss.

How to Complete a Consignment Sales Agreement — Step by Step

Follow a concise sequence to record parties, goods, financial terms, performance expectations, and execution details to ensure enforceability and clear responsibilities.

01

Identify Parties: Enter full legal names and business entities.
02

Describe Goods: List item descriptions, quantities, and SKU information.
03

Set Terms: Specify consignment period, price splits, and fees.
04

Sign & Store: Obtain signatures and retain executed copies.

Configuring a Digital Consignment Workflow

Set up the document flow to capture signatures, route copies, and retain records. Define authentication and storage settings before sending.

Field	Configuration
Signature Type	eSignature with audit trail
Authentication	Email plus optional SMS code
Delivery	Signed PDF to all parties
Retention	Secure archive with access logs

Technical Requirements and Supported Formats

Choose a platform that supports PDF and DOCX uploads, produces tamper-evident signed files, and provides an audit trail for each signing event.

File Formats: PDF, DOCX, and XLSX supported
Integrations: CRM and cloud-storage connectors
Authentication: Email, SMS, SSO options

Typical Digital Signing Flow for a Consignment Agreement

A standard online signing process moves the agreement from upload to signature, then to distribution and secure storage, capturing an audit trail at each step.

Upload: Sender uploads the completed agreement file
Prepare: Place signature, initial, and date fields
Send: Dispatch signing links or email invitations
Complete: Signers authenticate, sign, and receive copies

Key Timing Considerations and Tax Deadlines

Consignment arrangements intersect with tax and reporting timelines; ensure correct payee identification, timely reporting, and prompt handling of unsold goods.

Provide W-9 on Request:

Consignors should supply a W-9 when requested to avoid backup withholding.

1099-NEC Deadline:

File and furnish 1099-NEC to reporting recipients by January 31.

Payment Timing:

Specify payment window after sale (e.g., net 30) in the agreement.

Return Window:

Define how long consignee may hold unsold goods before return.

Record Retention:

Keep sales and settlement records per federal and state retention rules.

Frequently Asked Questions About Consignment Sales Agreements

Answers to common legal, tax, and execution questions that arise when drafting, signing, and administering consignment arrangements.

Need help? Contact support

Can a consignment agreement be signed electronically?
Yes. Electronic signatures are generally enforceable under the ESIGN Act (15 U.S.C. §7001) and UETA in most states, provided intent, consent, attribution, and record retention requirements are met.
Do consignors need to provide a W-9?
Provide a W-9 when requested by a payer to ensure correct taxpayer identification. Failure to supply a correct TIN can trigger 24% backup withholding per IRS rules.
Who is responsible for insurance and loss?
The agreement should specify whether consignor or consignee insures goods and at what coverage level. Absent clear allocation, state contract law and the written terms govern loss allocation.
Is notarization required for validity?
Most consignment agreements do not require notarization to be valid, but notarization or witnesses may be required for recording or for specific state law purposes—check local rules.
How can a party cancel or revoke the agreement?
Follow the termination clause: provide required notice, arrange return of unsold goods per terms, and reconcile outstanding payments. Document the process in writing to avoid future disputes.
What if inventory reconciliation reveals shortages?
Use the contract’s inspection, audit, and dispute resolution clauses. If reconciliation confirms shortages, remedies typically include replacement, reimbursement, or damage offsets per the agreed procedure.

eSignature Pricing and Feature Comparison

A comparison of common eSignature vendors and baseline feature availability to consider when executing Consignment Sales Agreements electronically.

	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	Varies	Varies	Varies	Varies
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

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