The consignment agreement is the agreement by which the owner of a good (supplier) leaves that good in the possession of a retailer (consignee) for a fixed period of time so that the consignee may sell the good to its clients. It is only once the product is sold to the client that the consignee must pay the sale price to the supplier, in exchange for a service charge. The consignment agreement does not constitute a sale of goods because the consignee does not buy the product when it takes possession, but rather when it is sold to a client. The consignee keeps all or part of the profits as compensation.

The consignee undertakes to provide the supplier with a detailed sales report concerning the consigned goods and to pay the price of the goods sold at the end of the consignment period. The consignee is responsible for any damage that the consigned goods may incur while in its possession.

A consignment agreement is not regulated by any specific law in Quebec, and should not be confused with a conditional sales agreement (see template L02200).

We recommend using this template to define the relationship between a manufacturer of goods (supplier/consignor) and a retailer who will sell such goods (consignee). Consignment enables a manufacturer to make its goods available to a consignee's clients, and enables the consignee to add the manufacturer’s goods to its inventory without being the owner of the goods or having to pay for them before selling them. This template has been drafted to define either an ongoing relationship between the parties or a single transaction.

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Activities
0.01.02 Agreement
0.01.03 Best Efforts
0.01.04 Breach
0.01.05 Force Majeure
0.01.06 Goods
0.01.07 Legal Representatives
0.01.08 PARTY
0.01.09 Person
0.01.10 Place of Business
0.01.11 Prime Rate
0.01.12 Term
0.02 Entire Agreement
0.03 Applicable Law
0.04 Non-Compliance
0.04.01 Severability
0.04.02 Substitute Provision
0.05 Miscellaneous
0.05.01 Cumulative Rights
0.05.02 No Waiver
0.05.03 Time and Days
a) Time of the Essence
b) Computation of Time
c) Delays
0.05.04 Financial References
0.05.05 Cross-References
0.05.06 Gender and Number
0.05.07 Headings
1.00 PURPOSE
1.01 Exclusive Right
1.02 Acceptance of CONSIGNEE
1.03 Delivery of Goods
1.04 Identification of Goods
2.00 CONSIDERATION
2.01 Sale Price
2.02 Deduction from Sale Price
2.03 Interest
3.00 TERMS OF PAYMENT
3.01 Payment of Sale Price
3.02 Trust Account
3.03 During Consignment Period
3.04 After Consignment Period
4.00 SECURITY
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
6.00 REPRESENTATIONS AND WARRANTIES OF SUPPLIER
7.00 REPRESENTATIONS AND WARRANTIES OF CONSIGNEE
8.00 MUTUAL DUTIES AND OBLIGATIONS
9.00 DUTIES AND OBLIGATIONS OF SUPPLIER
10.00 DUTIES AND OBLIGATIONS OF CONSIGNEE
10.01 Insurance
10.01.01 Insured Risks
10.01.02 Amount of Coverage
10.01.03 Insurer
10.01.04 Prior Notice
10.01.05 Additional Named Insured
10.01.06 Certificates of Insurance
10.01.07 Notice of Modification or Cancellation
10.01.08 Remittance to SUPPLIER
10.02 Best Efforts
10.03 Display and Identification
10.04 Remittance of Sale Price
10.05 Collection of Taxes
10.06 Risk of Loss
10.07 Warranty
10.08 Relocation of Goods
10.09 Registers
10.10 Notice to Lessor
10.11 Inspection
10.12 Inventory
10.12.01 Access to Place of Business
10.12.02 Separate Accounting Records
11.00 SPECIAL PROVISIONS
11.01 Proprietary Rights
11.02 Conduct of PARTIES
11.03 Assignment
11.03.01 Prohibition
11.03.02 Effect of Breach
11.03.03 Exception
11.04 Relationship Between the PARTIES
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Choice of Forum
12.03 Counterparts
12.04 Amendment
12.05 No Waiver of Rights
12.06 Language
13.00 TERMINATION
13.01 Expiry of Term
13.02 As of Right or by Mutual Consent
13.03 No Default
13.04 Event of Default
13.04.01 With Prior Notice
13.04.02 Change in Control
14.00 EFFECTIVE DATE
15.00 DURATION
15.01 Initial Term
15.02 Renewal
15.03 Non-Renewal
16.00 SCOPE

SCHEDULE A – EXCERPT OF A RESOLUTION OF SUPPLIER
SCHEDULE 0.01.06 – GOODS IN CONSIGNMENT
SCHEDULE 4.00 – SURETYSHIP AGREEMENT