Consignor

Consignor Meaning

The consignor is an independent owner who transfers goods to the consignee for sale on their behalf. Consignee acts as an agent or middleman and the ownership of the stock remains with the consignor until the goods are sold.

Consignor, consignee concept is typically used in the case of auction. In the case of an auction, the person who wants to sell the goods/ property through auction is consignor, and the auction house is the consignee. The auction house arranges the auction and sells the goods/property on behalf of consignor and after-sale or finalization of the deal; it charges the fees or percentage of sale known as fees or commission.

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Source: Consignor (wallstreetmojo.com)

Example of Consignor/Consignee Relationship

Example #1

ABC Ltd. Manufactures Spices, and it wants to sell the spices throughout the world. To sell across the world, ABC Ltd. entered into various consignment agreements with the dealers around the world and made all arrangement to transfer some of the packets for sale and get the order. All dealers act as consignees. Upon each sale, ABC Ltd. will give dealers a fixed or variable commission.

Example #2

Mobile manufacturing companies enter into an agreement with the online selling platforms like Amazon to sell mobiles on their behalf. The arrangement is called a consignment arrangement, the mobile manufacturing companies are consignors, and online selling platforms are consignees.

Responsibility of Consignor

  • To transfer goods to the consignee.
  • To provide sufficient stock to the consignee.
  • To provide quality goods.
  • To make available the consignment order on time to the consignee.
  • To ensure goods placed with consignee are safe.
  • To agree with the consignee in writing.
  • To provide a timely commission to the consignee.
  • To solve complaints from consignees.
  • To ensure payment of goods sold by consignee received timely from the consignee and to co-ordinate with the consignee for payment.

Benefits

Limitations

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