The Valuation Contract (Sales Account) is the agreement whereby a party delivers one or more goods to another for the purpose of selling them to third parties. The retailer will pay the price of the goods on consignment only if he is able to sell them by a certain date. Otherwise, he will have to return the products to the supplier.
The peculiarity of the consignment contract is that it does not transfer the ownership of the goods to the final retailer, but only grants their availability, a characteristic that entails advantages for both the supplier and the final retailer:
- the supplier on consignment can deliver their products to multiple resellers, who will be encouraged to receive them since they do not have to take risks on the unsold, and thus have a widespread distribution throughout the territory
- the retailer can stock up on a vast assortment of products, without running any risk on unsold goods, allowing him to manage the warehouse efficiently.
How does the sales account work?
With an appraisal contract, the products are delivered by the supplier to the retailer who can put them up for sale without acquiring ownership and without having to pay for the goods immediately. Only when the products are sold to the final customer will ownership be transferred to the final customer and the reseller will have to pay the supplier.
The consignment agreement establishes a deadline within which the products can be sold. After this deadline, the retailer must return unsold products without paying any price. In the event that the retailer does not return these goods within the agreed term, he will be forced to pay the price to the supplier as if he had sold them.
Even if the retailer is not the owner of the goods, he is liable in the event of deterioration or perishing of the products delivered and in storage at his premises (art. 1557 of the civil code). In case of damage, theft or tampering with the products, even for reasons not attributable to the retailer, he will, in any case, be obliged to pay the price of the damaged or lost products.
An example of how the sales account works is a shop that displays the products of a small artisan. The shopkeeper has full availability of the products until they are sold to the end customer. In the event of a sale, the shop will collect the final price and pay the agreed supply price to the craftsman, while if the goods are not sold they will be returned to the craftsman.
When using the consignment agreement
The consignment contract is used to regulate the commercial relations between supplier and retailer for many types of products, such as food, newspapers and magazines, clothing, accessories, jewelry, etc. It can be used both by large companies such as large distributors or wholesalers and by individuals, small entrepreneurs or artisans.
The appraisal contract is also often used for online sales. For example, to supply the warehouses of eCommerce stores that want to offer a large variety of products while limiting the costs of the goods.
It is also possible to use the sales account to provide exclusivity for the benefit of one of the parties or both. The supplier may require the reseller to sell only its products and, conversely, the exclusive reseller may ask the supplier to be the only one who can market its products.
If, on the other hand, the supplier does not want to distribute its products on consignment through third-party resellers, but wants to replicate its commercial formula and open businesses with its own brand, the franchise agreement must be used.
What the estimation contract model contains
Our estimation contract meets all legal requirements. The main clauses included concerns:
- Products: the description of the consignment products delivered by the owner to the retailer
- Exclusive: possibility to choose between an exclusivity in favor of the supplier, the retailer or both
- Duration: the choice between a permanent or a fixed-term contract
- Return of products: methods and times for returning unsold or defective products
- Defective products: rules for handling products with defects
- Termination of the contract: forecast of the cases and the ways in which the parties can terminate the relationship
At the end of the interview, we will guide you step by step through all the subsequent steps necessary to correctly stipulate your sales account contract.
Information you need
To complete the document, you need the details of the parts and of one or more products to be sold.
Remember that our interview does not generate a simple facsimile of an estimation contract. Based on your answers, the system automatically draws up a customized contract model for your needs, guaranteeing its legal correctness.
The document can be modified in all its parts. Don’t worry so if you don’t have all the information available during the interview, you can always enter it later.
- Estimation contract
- Consignment contract
- Contract on consignment
- Contract for viewing
Other useful templates and facsimiles
- Commercial Distribution Agreement: for the marketing of goods or services in a specific territory
- Franchising Agreement (Commercial Affiliation): to create a network of affiliated points of sale and spread your products
- Contract for the Periodic Supply of Goods: to regulate the supply of goods between suppliers and their customers
- Contractual Joint Venture: for the realization of a common project
- Payment Reminder Letter: to formally request the payment of a debt