What is legally required to be defined in a consignment agreement?

A consignment agreement is a legal arrangement between two parties, typically the consignor (the owner of the goods) and the consignee (the seller or dealer). It is critical for the agreement to define the rights of both the consignor and consignee. This includes specifying who holds ownership of the goods, how profits from the sale are distributed, and obligations related to the handling and sale of the items.

Clearly outlining the rights ensures that both parties understand their responsibilities and protections under the law, reducing the risk of disputes. For instance, it should detail what happens in situations where goods are unsold or damaged, or how liabilities are shared.

While other aspects, like sale price, payment methods, and duration of the consignment, may be important details in an agreement, they are not universally required elements as the definition of rights is critical to the operational framework of the consignment relationship. The focus on rights creates a clear legal understanding that supports both parties throughout the agreement.