Meaning of Consignment

What is Consignment:

The word consignment derives from Latin consignment, which indicates the action of consigning, allocating or designating an amount of money to make the payment of expenses or debts. It also refers to commercial contracts whose merchandise payments are made after their sale.

On the other hand, consignment can refer to placing an amount of money in the hands of a third person; set budgets for certain items to pay for services; register an opinion according to court regulations.

The word consignment can be replaced by the synonyms deposit, assets, delivery or remittance.

See also the meaning of Consign.

Consignment contract

The consignment or commercial consignment contract is an agreement in which two figures participate, the consignee (owner of a good or merchandise) and consignee (person who is responsible for the sale of a good or merchandise), in which the power of sale without losing the property rights of the merchandise.

This is a business activity that in the accounting field is also known as consignment in accounting.

The consignee assumes or contracts the obligation to sell the merchandise received by the consignor, after reaching an agreement, in which its value and the percentage that both parties must receive for the sale of it must be stipulated.

Said agreement also usually establishes that the merchandise not sold by the consignee must be returned to the consignee according to the established deadlines.

The consignment contract offers an advantage for both parties. For example, the consignor does not see the need to make a large capital investment in the purchase and storage of merchandise and, for its part, the consignee benefits because it can streamline and avoid stagnation of its capital and sale of merchandise.

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