Related Expertise
- Account collection
- Addition or departure of shareholders
- Bankruptcy and Restructuring
- Buy-Sell Agreement
- Change in the legal form of a company
- Commercial litigation (shareholders, employees or others)
- Company Book
- Consignment Contract
- Contract of partnership
- Convertible debenture
- Corporate reorganization and restructuring
- Corporate resolutions
- Creation of a subsidiary
- Director’s liability
- Drafting of articles of constitution
- Franchising
- Governance and Internal Management
- Implementation of a Tax Memo
- Intellectual Property
- Joint Venture Agreement
- Legal Publicity of Enterprises
- Management Company
- Planning and Tax Litigation
- Preparation and review of commercial leases
- Securities and access to public markets
- Share subscription agreement
- Shareholders Agreement
- Starting a business
- Strategic Partnership
- Taxation and tax litigation
- Term Sheet
- The Letter of Intent of the Offer to Purchase
- Trusts (estate and asset protection)
- Unfair competition, Duty of loyalty
In the context of a company’s business, the consignment contract can be a very interesting tool. Indeed, this contract, innamed by the Civil Code of Quebec, generally allows the owner of a good, the supplier, to make a sale through a merchant, the consignee. The consignee remains in possession of the goods until they are sold to a third party, but is never the owner. Thus, the consignee is obligated to pay the sale price to the supplier only after the property has been sold, often in exchange for a commission offered by the supplier. In addition, the consignment contract does not create any obligation to sell on the part of the consignee, allowing the consignee to return unsold goods to the supplier without paying any penalty or compensation.
A supplier may wonder what the advantage is of using a consignment contract rather than a distribution contract, if the consignee has no obligation to the supplier other than to pay for the goods if they are sold. The main advantage is that there is virtually no obligation on the consignee. Indeed, when a supplier wishes to market a product, it is quite possible, especially if the supplier is a young company, that the merchant does not wish to take the risk of buying goods which will remain unsold, since this consists in a financial risk which will then weigh only on him. The consignment contract then constitutes a transfer of the financial risk since the merchant will have to pay the good to the supplier only if he manages to sell it himself. He will then be incited to accept to become a consignee, especially since he will be able to make a commission on the sale.
On the other hand, although the supplier bears the financial risk, the consignment contract can nevertheless help him to make his products known more easily. Moreover, if the amount of the commission is sufficiently high, the consignee then risks to make important efforts in order to sell the good. Under these circumstances, this type of contract can really contribute to the growth of a company.
The lawyers at Bernier Fournier have a highly developed business network and know how to use it judiciously when drafting and negotiating commercial contracts. They will be able to assist you in asserting your legal and financial interests at all stages of your company’s growth.