Sale or return agreement

About this sale or return agreement

This is a comprehensive sale or return agreement for supply of goods on a sale or return basis, also known as a consignment sale basis.

Under a sale or return arrangement, an owner of goods, such as a creator, supplier, manufacturer or distributor, provides products to a retailer who pays for them only once they have been sold. The risk of not making a sale is transferred from the retailer to the owner, making it more attractive to the retailer to offer the products for sale.

This agreement can be used where the retailer sells through a shop or at any other venue, such as a trade show, an office vending machine, or a pop-up railway station stall.

When to use a sale or return contract

Consignment is often used to introduce new products to a market, where the product itself or the brand is relatively unknown.

It can also be used where the method of selling or location is untested and where the items are of high value.

Examples

• A gift shop might agree to take costume jewellery from a new designer.

• An art gallery might show work from an artist in return for commissions on sales.

• A security alarm fitting company might hold several models of alarm system so that it has the most suitable available for a customer when required.

• Dairy products from local farmers might be offered for sale through vending machines in a community hall.

The essential feature of the agreement is that the retailer takes responsibility for the goods while in his or her care and pays the goods owner only for those he or she has sold. A written agreement is important to use because it establishes that ownership (title) of the goods remains with the supplier and also records what inventory the retailer carries.

This agreement is not suitable as a concession agreement where the concession is staffed by the seller and/or a fixed space is managed by the seller.

The contract can cover a deal for multiple outlets. The template could easily be edited for use with multiple individual shop owners or show managers.

Contents

The contract is comprehensive so as to be able to cover many different variations of consignment deals. Alongside many small legal matters, it covers subjects including:

• Ordering, delivery and stock management
• Price management
• Stock holder obligations - a raft for you to choose from
• Payment terms and procedure
• Goods returned by customers
• Title while the goods are with the retailer
• Return terms
• Intellectual property protection
• Indemnity in case things go wrong
• Alternative termination arrangements
• Many other strong provisions