Consignment
Definition:
Consignment is a business arrangement in which one party (the consignor) delivers goods to another party (the consignee) to sell on their behalf. The consignor retains ownership of the goods until they are sold, and the consignee earns a commission or fee from the sale. This arrangement allows businesses or individuals to market and sell products without immediate transfer of ownership. Consignment is common in retail, art galleries, and secondhand or specialty shops.
Consignment Information
In a consignment relationship, the consignor provides inventory to the consignee, who displays and sells it to customers. The consignee acts as an agent, selling the goods under agreed-upon terms and remitting proceeds—minus commission or fees—back to the consignor after a sale. The consignor bears the risk of unsold inventory since ownership remains with them until purchase. Consignment agreements typically specify payment terms, duration, pricing authority, and liability for loss or damage. This model benefits consignors by expanding their sales reach and benefits consignees by offering products without upfront costs.
Florida Legal Definition
Under Florida law and the Uniform Commercial Code (UCC) as adopted in Chapter 672, Florida Statutes, a consignment is a transaction in which goods are delivered to a merchant for sale but ownership remains with the consignor until sale. Consignments are treated as “secured transactions” under certain conditions, requiring the consignor to file a financing statement (UCC-1) to protect ownership rights against the consignee’s creditors. Florida law ensures transparency and protection for both parties by requiring clear documentation and compliance with UCC filing rules when applicable. Properly structured consignment agreements prevent disputes over ownership and financial responsibility.
How It’s Used in Practice
In Florida, consignment arrangements are widely used in retail, art, and luxury goods sectors. For example, artists may consign paintings to a gallery or clothing designers may consign inventory to boutiques. Businesses often use consignment to test new markets without full financial risk. Consignees are responsible for showcasing and selling the goods, while consignors receive payment only after items are sold. Legal practitioners assist in drafting consignment agreements to ensure compliance with UCC filing requirements and to safeguard ownership interests in the event of consignee insolvency.
Key Takeaways
- Consignment allows goods to be sold by a consignee on behalf of the consignor while ownership remains with the consignor.
- The consignee earns a commission or fee from the sale of consigned goods.
- Under Florida Statutes Chapter 672, consignments may be treated as secured transactions requiring UCC filing.
- Consignment agreements define responsibilities, pricing, payment, and liability for unsold or damaged goods.
- Common in retail, art, and fashion industries, consignment provides flexibility for sellers and display opportunities for merchants.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
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