Consignment is an arrangement between two parties for one to sell the goods of another. If the goods are sold, a discounted sales price is paid to the original seller with the balance to the buyer/consignee. Many retail industries have used consignment for years, but many are moving towards consignment. Other industries have used consignment and consignment-like relationships, such as “conditional sales.”1 In this uncertain economy, consignment is realizing a resurgence and may be an effective cost saving measure for vendors/consignees. This article addresses the law on consignment and how consignors protect themselves.
Consignment is governed by Article 9 of the Uniform Commercial Code (UCC). §9-109(a)(4). Consignment is defined in UCC §9-102 as:
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