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Summary A Consignee is an agent who is entrusted with the possession and control of his principal's ("Consignor") goods for the purpose of selling them. A Consignment Agreement is generally used to give the Consignor protection.
Consignment Consignor ships to Consignee, on consignment, specific products in a given quantity. Consignee receives the Products and stores them carefully and properly in Consignee's warehouse. Consignee or Consignor, from and after the time it ships or receives such products, may pay all expenses, including all expenses of carting, handling, storage, selling, and delivering to customers, and all taxes and other charges assessed and levied on such products while in its possession.
Title to goods The consigned products remain Consignor's property until sold to Consignee's customers and title to the proceeds of the sales of such products shall vest in and belong to Consignor until accounted for and remitted to Consignor.
Loss or damage Consignee is responsible for reimbursing Consignor for all loss and expense to Consignor resulting from damage to or destruction of the consigned products while in Consignee's possession, and until the title passes from Consignor by reason of the sale and the proceeds of sale have been accounted for and remitted to Consignor. Consignor assumes the risk of loss or damage to such products by fire or other insurable perils, to the extent of Consignor's insurance coverage.
Reports Consignee makes a report to Consignor listing sales from the consigned products made by Consignee. Consignor mails an invoice to Consignee covering the sales shown in such report.
Records Consignee keeps records of all products in its possession under consignment. The report should include the products in transit as well as the products in Consignee's warehouse.
Authority to act for consignor Consignee usually conducts the entire business of selling such products in Consignee's name and at Consignee's cost and expense.
Guaranty Consignee guarantees that it will sell each month out of the consigned stock a certain amount of product/inventory.
Independent Contractor Important to distinguish this hire from an employee to avoid any tax liability in the future. The onus of responsibility falls onto the Consignee for payment of social security or federal or state income taxes. Consignee acknowledges that it is his/her legal responsibility to pay all applicable federal and state income taxes (including estimated taxes), social security, Medicare and all applicable federal and state self-employment taxes.
Severability In the event any part, portion or provision or paragraph of this Agreement is declared void or invalid, the remaining portions of this Agreement are not affected and remain in full force and effect.
Mediation and Arbitration Mediation and Arbitration should always specify a location in a convenient jurisdiction (preferably, in the same county where they run their business). Mediation is a non-binding way to settle the dispute quickly and amicably. If unable to settle in mediation, arbitration is first option available. Arbitration is the preferred alternative to litigation because of speed, cost, and ability to maintain low profile (no info is publicly available).
Governing Law Always stipulate that the contract will be governed under the law and jurisdiction where business is conducted. Always make sure that venue and jurisdiction are convenient.
No Modification or Waiver No modifications except those specifically agreed upon by the parties in writing. Any waiver of a term or provision will not act as a waiver of any other provision.
Entire Agreement This agreement constitutes the entire agreement of the parties and may be modified only in a writing executed by both parties.
Notices Notices should always list the current and best addresses where each party may contact the other for whatever reason.
Restrictive Covenants Such restrictive covenants offer statutory remedies for violation and often prevent a party from unfairly competing against another or disclosing confidential business information. As always, ensure any such restrictive covenant is within statutory parameters.
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