Consignment stock agreement—review and negotiation guide

Produced in partnership with Paul de Vince of ComLaw

Practice notes

Consignment stock agreement—review and negotiation guide

Produced in partnership with Paul de Vince of ComLaw

Practice notes

Scope and purpose

This Practice Note is prepared to assist with the review and/or negotiation of a consignment stock agreement, and accompanies Precedents: Consignment stock agreement—pro-customer and Consignment stock agreement—pro-supplier.

A consignment stock arrangement is one where a seller of goods (the consignor) consigns a stock of goods to a buyer (the consignee) and in doing so retains ownership of those goods pending the moment when they are taken/appropriated for use by the buyer. The stock of the seller’s goods is retained by the buyer, usually on its premises, and is at the buyer’s disposal. There is a subtle difference here compared to a typical supply of goods under retention of title (RoT) terms. With consignment stock (and unless your agreement states otherwise) a contract of sale as to specific consigned goods does not arise until they are appropriated by the buyer from the stock for use, whereas with a typical supply the contract usually comes into place before delivery.

Types of consignment stock arrangement

Consignment stock arrangements arise in a variety of circumstances.

Paul de Vince

Solicitor, ComLaw

My practice has only ever been about doing commercial law and I have been fortunate to work with many of the UK’s largest and smallest businesses on a vast array of projects. What I try to do now is to bring that experience to bear to offer the lightest touch possible to deliver a risk-free route through the commercial and general trading law landscape. That may be through drafting savvy contracts that major on the likely pinch points that will arise under a supply line or through offering advice outside the contract on how to keep trade flowing in the most mutually beneficial way for customer and supplier.

Jurisdiction(s):

United Kingdom

Key definition:

Scope definition

What does Scope mean?

The scope of works is a term which may be used generally in construction projects to describe the works that the contractor is expected to carry out. More specifically, ‘Scope’ is a defined term used in the NEC4 suite of contracts to specify and describe the work which the contractor is to undertake, together with any constraints on how it is to carry out such work. In the NEC3 suite of contracts, the term ‘works information’ wass used instead of Scope.

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