Consignment: what is this form of product sale?

A consignment contract is a document that is concluded for the purpose of buying / selling in foreign trade. The legislation of the Civil Code of the Russian Federation does not explicitly provide for it. On the legal essence of this agreement is mixed (paragraph 3 of Article 421 of the Civil Code of the Russian Federation). The parties agree on this document to agree on the rules, the elements of which are contained in the mixed contract. Basically, the contract of consignment determines the relationship of the supplier (seller) and the distributor (the buyer). For this reason, the provisions of the Civil Code of the Russian Federation on the supply agreement can be applied to it.

This document also contains elements of a commission agreement. Usually there are signs of a storage contract in it, if the goods are stored in a warehouse with third parties. In some cases, the consignee acts as a responsible custodian. The consignment contract may also contain some elements of the service agreement - market monitoring, marketing, delivery, transport expedition and so on.

The term "consignment"

This term has a lot of meanings. This word can be called a document, a special order of delivery and payment for goods, an intermediary agreement, an agency contract and much more. Because of the extensive interpretation of the term "consignment" - that this, in fact, is not easy to determine. Sometimes this becomes the cause of litigation. You can explain this by the customs of business turnover. If a consignment is defined in the subject of the contract , then all interested parties will clearly understand what their obligations are, but if specific conditions of cooperation are not stipulated, it becomes unclear what the concluded agreement, for example, is 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 during the entire period of the product's stay at the latter. The consignment consignment agreement for the sale of goods must clearly define this point. That is, this definition or any other similar one should necessarily be reflected in the text of the agreement itself.

What is the advantage of the consignment agreement?

An agreement for the sale of goods, in which ownership rights remain with the supplier, is called consignment. That this is not an ordinary delivery, it is understandable. 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 consignor unrealized goods from the warehouse, in the event that the latter turns out to be an insolvent counterparty. This is the advantage of choosing such an agreement.

Peculiarities of payment for goods when it is transferred under a consignment agreement

Payment for the delivered products is made on accounts receivable, that is, in installments. In some cases, a price collusion, a unilateral refusal to fulfill the obligations, punitive agreements and other measures are chosen as a way of securing obligations.

Terms of agreement

The consignment contract may contain conditions not only for the sale, storage, but also for the promotion of the goods in a particular territory. In this case, the sales representatives directly contact the points of sale on the sale of goods. As sales representatives are employees of either the supplier or the buyer. It is acceptable to involve intermediaries with whom the contract on provision of paid services is concluded and a document on liability.

Often, a consignment that this is already known in trading practice includes conditions that stipulate the order of advertising the goods. You can include here the following: the implementation of drawings, tastings, test drives and other promotional activities with the participation of interested consumers. The agreement also reflects the conditions on the time and place of the advertising campaign, on the control of the availability of goods in the outlet, its layout, and so on.

Forms of agreement

There is a simple, partially returnable and irretrievable consignment. What are these forms and how do they influence the organization of the sale of the goods? Partially refundable consignment implies the buyer's obligation to purchase from the supplier an agreed quantity of unrealized goods. The irrevocable form does not give the consignee the right to return the unsold goods, he must be redeemed in full.

Nevertheless, the problem of guaranteed sales will not be solved with the help of a consignment form. It is clear that if the consignor can not successfully sell the goods, the partners will conduct an analysis of the current situation to determine the cause of the failure. As a rule, the main factor of low demand is non-competitiveness of products - insufficient technical level of the product, high price level, much more.