A Consignment Agreement is a good contract only if it serves the purposes of both makers. Agreements can be slanted in favor of one signor or the other in specifying obligations, rights and recourses.
Items in the Agreement:
- The Agreement should stipulate a price and whether the item is to be discounted with the passage of time. Typically an item is marked down after a set number of days, discounting in increments of 10% (based upon the original sale price).
- The consignment form should include the amount to be paid and consignee. Percentages vary. Some shops impose a 'buyers fee' which is deducted from the sale proceeds prior to applying the shops percentage.
- The agreement should include the periodicity of settlements. This is typically done monthly with payments for the previous months sales.
- Set the duration of the term of consignment. When does it begin? How long does it last? Who pays shipping, handling, packing, insurance, and other costs, if any?
- Every state has adopted the Uniform Commercial Code (UCC) that shield consignments. If inventory damage is due to the store's negligence, the store must pay for the loss. If the harm is not the gallery's fault (flood, fire, theft, etc), the store is not liable. It may be necessary for an independent arbitrator or the courts to decide.
These and any other issues should be spelled out in the consignment agreement. Each party should have a duplicate signed by all participants.
Here's a Sample Consignment Contract:
1. General: Sixty percent (60%) of the selling price of each item shall be paid to ___________________."
2. Liability: ______________ assumes no responsibility for the loss or destruction of any item.
3. Imperfect consignments in need of repair or cleaning may, without notice, be donated. Donation receipts available on request only.
4. Seller must give a minimum of a 2-day notice before pickup. Sellers will be responsible for pulling all unsold consignments.
5. Owners must pick up all unsold consignments within three (3) months from the date of consignment or renew for another period. All unsold consignments not reclaimed up after the end of the contract period will, without further notice, automatically become property of ____________________.
6. Renewability: This Consignment Agreement is renewable ONCE ONLY! Maximum consignment length is 6 months.
7. Price Reductions: All consignments may be subject to a price reduction at the discretion of __________________.
8. Consignment payment will be voided six months after agreement expiration.
9. Consignment checks are issued monthly after the 15th for the prior whole month.
10. Record Keeping and Follow-Up Calls: It is the responsibility of the owner to maintain all records of consignments and call not less than once a month after the 15th to confirm sales, pickups, and contract expiration.
11. All transactions and resolutions to disputes will take place in (location).
All consignments must be retrieved up by expiration date unless consignment is extended - no exceptions.
The Agreement can be accompanied by a separate list of consignments with provision for both partys' identification and signatures.