A consignment agreement is a document that is concluded for the purchase / sale of foreign trade. The legislation of the Civil Code of the Russian Federation does not expressly provide for it. In legal terms, this agreement is mixed (Clause 3, Article 421 of the Civil Code of the Russian Federation). The parties in accordance with this document agree on the rules, the elements of which are contained in the mixed agreement. Basically, the consignment agreement determines the relationship between the supplier (seller) and the distributor (buyer). For this reason, the provisions of the Civil Code of the Russian Federation on the supply contract can be applied to it.
This document also contains elements of a commission agreement. Usually, there are signs of a storage agreement in the case if the goods will be stored in a warehouse with third parties. In some cases, the consignee acts as the custodian. An agreement on consignment of goods may also contain some elements of an agreement on the provision of services - market monitoring, marketing, delivery, transport forwarding, and so on.
The term "consignment"
This term has a lot of meanings. This word can be called a document, a special procedure for the delivery and payment of goods, an intermediary agreement, an agency contract and much more. Due to the extensive interpretation of the term “consignment” - that it is, in fact, not easy to determine. Sometimes this becomes the cause of litigation. This can be explained by business customs. If consignment is defined in the subject of the agreement , then all interested parties will clearly understand what their obligations are, but if the specific conditions of cooperation are not agreed upon, it becomes unclear how the concluded agreement differs, for example, from a commission or delivery.
Consignment as a form of sale of goods
Consignment should be considered as a form of sale of goods in which the owner of the goods transfers it for further sale to the buyer. At the same time, the supplier remains the owner of the products delivered to the consignee throughout the entire period when the goods were with the latter. The consignment agreement for the sale of goods must clearly define this clause. That is, this definition or any other similar to it should definitely be reflected in the text of the agreement itself.
What is the advantage of a consignment agreement
An agreement to sell a product in which ownership of the goods remains with the supplier is called consignment. That this is not an ordinary delivery, of course. That is, the buyer does not become the owner of the delivered products at the time of its transfer to him. It turns out that the exporter will always be able to withdraw from the consignee goods that are not sold from the warehouse, if the latter turns out to be an insolvent counterparty. This is the advantage of choosing such an agreement.
Features of payment for goods during their transfer under a consignment agreement
Payment for the delivered products is made on receivables, that is, by installments. In some cases, a conspiracy is chosen as a way of securing obligations, unilateral refusal of fulfilled obligations, punitive agreements and other measures.
Terms of agreement
The consignment agreement may contain conditions not only for the sale, storage, but also for the promotion of goods in a certain territory. In this case, sales representatives are in direct contact with points of sale regarding the sale of goods. Representatives of either the supplier or the buyer act as sales representatives. It is allowed to involve intermediaries with whom a contract for the provision of services for a fee and a document on liability are concluded.
Often, consignment, that this is already known in trading practice, includes conditions providing for the procedure for advertising a product. The following can be attributed here: the implementation of draws, tastings, test drives and other promotional events with the participation of interested consumers. The agreement also reflects the conditions on the time and place of the advertising campaign, on monitoring the availability of goods at the outlet, its layout and so on.
Agreement forms
There is a simple, partially refundable and irrevocable consignment. What are these forms and how do they affect the organization of sales of goods? Partially returnable consignment implies the buyer's obligation to redeem the agreed amount of unsold goods from the supplier. The irrevocable form does not give the consignee the right to return the unsold goods, he must be redeemed in full.
However, to solve the problem of guaranteed sales using the form of consignment will not work. It is clear that if the consignee cannot successfully sell the goods, then the partners will analyze the current situation to determine the cause of the failure. As a rule, the main factor of low demand is the lack of competitiveness of products - insufficient technical level of the product, high price level, much more.