What Is a Consignor?

A consignor is an individual or entity that delivers goods to another party (the consignee) for the purpose of sale, storage, or transfer. The consignor retains ownership of the goods until they are sold by the consignee.

Consignor Explained

In a consignment transaction, the consignor provides goods to the consignee, who then attempts to sell the goods on behalf of the consignor. The key elements of this arrangement include:

1. Ownership: The consignor maintains ownership of the goods until they are sold.

2. Transfer of Possession: The consignee takes possession of the goods and is responsible for selling them.

3. Payment: Once the consignee sells the goods, they remit the sale proceeds to the consignor, often after deducting a commission or fee.

4. Risk: The consignor bears the risk of unsold goods, meaning that if the goods do not sell, they are returned to the consignor.

Consignment arrangements are commonly used in various industries, including retail, art galleries, and second-hand shops, allowing consignors to market their products without establishing a direct retail presence.

The Term Consignor in Different Legal Contexts

Commercial Law: In commercial transactions, consignors are typically manufacturers, wholesalers, or distributors who use consignment to reach broader markets without assuming the full risk and expense of retail operations.

Shipping and Transportation Law: In shipping, the consignor is the party that ships the goods, often seen in logistics and freight contracts. The consignor arranges for the transportation of goods and retains ownership until delivery and acceptance by the consignee.

Bailment: Consignment is a form of bailment, where the consignor (bailor) transfers possession but not ownership of goods to the consignee (bailee) under specific terms and conditions.

Common Misconceptions About the Meaning of Consignor

A frequent misconception is that the consignor loses ownership of the goods upon consignment. In reality, the consignor retains ownership until the goods are sold by the consignee.

Another misunderstanding is that consignment is equivalent to a straightforward sale. Unlike a sale, consignment involves transferring possession but not ownership, with the consignee acting as an agent to sell the goods on behalf of the consignor.

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What Is a Consignor?

Consignor Explained

The Term Consignor in Different Legal Contexts

Common Misconceptions About the Meaning of Consignor

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