Reviewing a consignment agreement with a retailer

A consignment agreement puts the supplier's stock on the retailer's shelves without the retailer buying it: the supplier is paid when the goods sell and takes back what does not. The whole value of the arrangement depends on the supplier keeping title to the unsold stock, being paid for what has sold, and getting its goods back if the retailer fails. The agreement needs to deal with each of the three expressly. I review the agreement from the supplier's side and return it marked up with a written explanation of the changes and which ones a retailer will accept, for a fixed fee of £495 in three working days.

Who this is for

Brands, makers, galleries, publishers and wholesalers in England and Wales that place stock with shops, department stores, galleries, garden centres or online marketplaces on consignment, sale or return or concession terms, and want the agreement to protect their goods and their money. The supplier and the retailer are businesses; consumer law applies to the retailer's sale to the customer.

What to look for in a consignment agreement

Title to the stock and the point of sale

The agreement should say that title to the goods stays with the supplier until the retailer sells them to a customer, and that at that moment the retailer buys from the supplier and sells on. Under section 18 of the Sale of Goods Act 1979 goods delivered on sale or return pass to the buyer when it signifies approval, adopts the transaction or keeps the goods beyond a reasonable time, so an agreement that is silent can transfer title before any customer sale. The review asks for an express term that title passes only on the retail sale, for the goods to be identifiable as the supplier's, and for the retailer to hold them as bailee.

The retailer's insolvency and the customer who bought in good faith

If the retailer enters administration or liquidation, consignment stock on its premises will be treated as the retailer's unless the supplier can prove otherwise. The review asks for a stock schedule, segregation or labelling, a right to enter and remove the goods on insolvency or non-payment, and a requirement that sale proceeds are held separately for the supplier. Under section 2 of the Factors Act 1889 a customer who buys in good faith from a mercantile agent in possession of the goods with the owner's consent takes good title, so the supplier's protection lies in the proceeds and the unsold stock, not in the goods once sold.

Retail price, the retailer's margin and payment

The agreement should set the retail price or the way it is fixed, the commission or margin the retailer keeps, when the retailer must report sales and pay, and what records the supplier may inspect. The review checks that payment is due within a stated period after each sale or each month's sales, that the Late Payment of Commercial Debts (Interest) Act 1998 applies, that the retailer cannot discount the goods without consent and then account at the discounted price, and that a customer's return or refund is charged back only where the return complies with the retailer's obligations.

Risk, insurance, damage and shrinkage

Because the supplier keeps title, risk stays with it unless the agreement moves it, since under section 20 of the Sale of Goods Act 1979 risk passes with property unless agreed otherwise. The review asks for the retailer to bear the risk of loss, theft and damage while the goods are in its possession, to insure them for their retail value with the supplier's interest noted, and to pay for goods lost or damaged as if sold. Shrinkage allowances should be stated rather than deducted at the retailer's discretion.

Returns, minimum display and termination

The agreement should say how long the goods stay on display, how and when unsold goods are returned, who pays return carriage, and in what condition goods may be returned, with a right for the supplier to reject damaged or shop-soiled returns. The review checks the notice period for termination, the supplier's right to collect all unsold stock and be paid for all sold stock on termination, and the retailer's obligations for customer returns after the agreement ends.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

If the shop goes bust, can we get our stock back?

Only if you can show it is yours. The review asks for an agreement that records title stays with you until retail sale, a stock schedule, labelling that identifies the goods as yours, and a right to enter and remove them, so that an administrator releases the goods rather than treating them as the shop's.

Who is responsible if the goods are stolen or damaged in the shop?

You are, unless the agreement says otherwise, because risk follows title. The review asks for the retailer to bear risk while the goods are in its possession, to insure them for their retail value, and to pay for lost or damaged goods as if they had been sold.

The retailer discounted our goods without asking and paid us on the lower price. Can it do that?

Only if the agreement lets it. The review asks for price changes to need your consent, for the retailer to account to you on the agreed price where it discounts without consent, and for a sales report that shows the price at which each item sold.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a supply agreement with a supermarket or big retailer
• Reviewing a distribution agreement from a manufacturer

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.