Consignment Agreement Checklist: What It Should Include

A consignment agreement puts in writing how a supplier and a store share responsibility when the supplier leaves products in the store and the store sells them. At minimum it should cover who the parties are, which products at what price, how much the store keeps, who bears losses, how often stock is counted and paid, and how the arrangement ends.

This is a checklist for small businesses. It is not a contract, it has no clauses to copy, and it is not legal advice. Rules for these agreements vary by country, so have a lawyer review the final agreement, especially when the goods are worth a significant amount.

The checklist

1. The parties

• Full details for both sides. Business name, tax or registration ID, address, and a contact person. Decide who is allowed to sign and to receive goods for the store.
• Locations covered. If the store has several branches, say which ones will hold your goods.

2. Products, prices and price changes

• Product list. Name, code, size or pack, and price for each item. A clear list prevents arguments about what was delivered.
• Retail price. Decide who sets it. Usually the supplier does, and the store does not change it without notice.
• Price changes. Agree how they are announced, how much notice is needed, and what happens to stock already on the shelf.

3. Commission or margin

• Percentage or amount. Write the exact figure the store keeps.
• Which price it is based on. The retail price, with or without taxes, or another agreed price. Settling this early prevents most disputes at payment time.
• Discounts and promotions. Decide who absorbs them and whether they change the base the commission is calculated on.

4. Delivery and the delivery note

• How goods arrive. Place, time window, and who handles transport.
• Signed delivery note. Every delivery needs a document listing products, quantities and date, signed by the person receiving. It is the foundation for every later count. See our delivery note template.
• Checking on receipt. Agree on a window for reporting shortages or damaged items after delivery.

5. Ownership and risk while goods are in the store

• Who owns the goods. In general, they stay the supplier’s until sold. Write it down.
• Who bears loss, theft, damage and expiry. This is a point to negotiate. Some stores cover losses from carelessness or theft, others do not. Decide each case separately and record it.
• Storage and care. Agree on basic conditions: where goods are kept, how they are displayed, and what to do with items sensitive to heat or humidity.

6. Counts

• Frequency. Weekly, every two weeks or monthly, depending on how fast the product sells.
• Who counts. The store, the supplier, or both. If the store counts, decide how it sends the result.
• Differences. Set what happens when a count does not match delivered minus sold: time to review, who covers a shortage, and how it is corrected. For the day-to-day routine, read about tracking consignment stock.

7. Settlement and payment terms

• When you settle. A fixed date, or a set number of days after each count.
• How it is paid. Payment method and the name it is paid to.
• What the statement shows. Sold, returned, commission kept, and balance due.
• Late payment. Decide what happens if the store falls behind, and after how many days new deliveries pause.

8. Returns, unsold and damaged goods

• Unsold goods. Decide after how long the supplier can pick them up and how much notice is needed.
• Damaged or expired items. Say who removes them, who replaces them, and who absorbs the cost.
• Customer returns. If a shopper returns a product to the store, define how it is recorded and who refunds the money.

9. Display and exclusivity

• Display. Location, any supporting material, and price labels.
• Exclusivity, if any. Area, category or period in which the supplier will not sell to nearby stores, or the store will not carry competing products. If there is no exclusivity, saying so also helps.

10. Duration, termination and stock at the end

• Term. A fixed date or automatic renewal.
• Notice to end. How many days either side must give.
• Stock at the end. A final count, a final settlement, and a deadline to collect remaining goods.

11. Records and confirming figures

• What is recorded. Deliveries, sales, returns and payments.
• How both sides confirm. A regular summary that each party reviews and accepts, in writing or in a dated message.
• How long records are kept. Agree on a reasonable period for keeping documents.

12. Disagreements

• First step. A conversation between the contact people within a set time.
• Reference documents. Agree which records count as the reference if figures differ.
• If it is not resolved. Ask your lawyer what the best route is for your situation.

Mistakes to avoid

• Handing over goods on a verbal agreement alone.
• Skipping the signed delivery note and trusting memory.
• Setting a commission without saying which price it applies to.
• Leaving theft and damage undefined.
• Never counting, or counting only after months have passed.
• Settling without a statement both sides can check.
• Forgetting what happens to the goods when the relationship ends.

Before signing

1. Read the whole agreement and confirm every checklist point is covered or deliberately left out.
2. Check that prices, commission and the calculation base match what you discussed.
3. Make sure a delivery note and a count sheet are ready to use from day one.
4. Confirm count dates, settlement dates and the notice period to end.
5. Ask what happens to the goods if the store closes or changes owner.
6. Have a lawyer review it, especially if the goods are valuable.

Frequently asked questions

Does a consignment agreement need to be in writing?

It is wise to put it in writing. A written agreement shows what both sides agreed and gives you a reference if figures differ. What the law requires where you operate is something a lawyer should confirm.

Who keeps the goods if the store closes?

In general the goods remain the supplier’s until sold, but what happens in practice depends on the country and the situation. Agree in writing how goods are collected if the store closes, and check with a lawyer before leaving large quantities.

Can I use a template from the internet?

Only as a starting point. A generic template may not fit your country or your type of product. Use it to organize your questions, then have a lawyer review the final text.

Does this checklist replace legal advice?

No. It is a practical guide to prepare the conversation with the store. Rules vary by country, and a lawyer should review the final agreement, especially when the value of the goods is significant.

To see the full picture, start with what consignment selling is and how to sell products on consignment to stores. If you track stock in a sheet, the consignment tracking spreadsheet is a good place to begin.

COMPA is a platform where you can record each store’s agreement (prices, commission and conditions), log deliveries, and let stores count through a link without creating an account. It reconciles delivered, sold and returned goods, produces statements, and records payments. You can see how it works on the modules page.