Entering into a consignment agreement
Are you a supplier or product owner who sells products through an intermediary? For example, artworks via a gallery, magazines via a newsagent kiosk, or cars via a showroom? You can enter into a consignment agreement. The products remain your property until they are sold. Learn more about consignment agreements.
Selling on consignment
You can always sell your products yourself. But you can also choose to sell products via other businesses. For example, in a bookshop, art gallery, or online shop. Do you remain the owner of the products until they are sold? If so, you deliver the products to the seller ‘on consignment’ (in consignatie). When the products are sold, you receive the amount for the sale from the seller, minus a specific amount of money. This is usually a percentage of the sale price, as payment to the seller for their service.
You sell socks with unusual prints for €15 a pair. You also want to offer your socks for sale in a gift shop. The gift shop wants to sell these socks, but does not want to risk having socks left over. You agree that the shop will sell the socks and only pay you when they are sold. The shop pays you €10 per pair of socks sold. So they earn €5 from the sale. You take back any socks that are not sold after an agreed time.
What is in a consignment agreement?
The consignment agreement contains the terms between the product owner and seller. For example:
- the percentage that the seller receives from the selling price (consignment percentage);
- the selling price of your product;
- how long will the products stay with the seller (consignment duration).
- how you deal with damage to products caused by the seller and who is liable
The agreements you make must comply with the Dutch Competition Act. It can be good to ask for legal advice when drawing up the exact terms of a consignment agreement.
What are the financial risks?
Sometimes a seller cannot sell all of your products. With a consignment agreement, you as the owner of the product carries the financial risk. The seller only pays you the money from a sale, minus the consignment percentage.
Who is liable?
In a consignment agreement, you agree on who is liable for what. For example, if damage occurs to the product while it is in the shop. Note: as owner of the product, you remain liable if there is a problem with the product. For example, if a new car is sold with some damage, the showroom that sells the car is not liable. The buyer always has to be informed who they are buying the product from.
Consignment and international business
It is also possible to deliver products on consignment to a company in another country. Make sure you check the rules, for instance for VAT and import requirements.
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Questions relating to this article?
Please contact the Netherlands Chamber of Commerce, KVK