Consignment Agreement (Australia)
CONSIGNMENT AGREEMENT
THIS CONSIGNMENT AGREEMENT (the "Agreement") is made on [Effective Date] between:
(1) [Consignor Name] (ABN/ACN [Consignor ABN]), of [Consignor Address], [Consignor City] [Consignor State] [Consignor Postcode] (the "Consignor"); and
(2) [Consignee Name] (ABN/ACN [Consignee ABN]), of [Consignee Address], [Consignee City] [Consignee State] [Consignee Postcode] (the "Consignee").
BACKGROUND
A. The Consignor wishes to deliver certain goods to the Consignee for sale on consignment on the terms set out in this Agreement.
B. The Consignee agrees to receive, store, display, and sell the consigned goods on the Consignor's behalf and to account to the Consignor for the proceeds of sale, less the Consignee's commission.
C. This Agreement is subject to the Personal Property Securities Act 2009 (Cth), the A New Tax System (Goods and Services Tax) Act 1999 (Cth), the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)), and the applicable laws of [Governing State].
1. CONSIGNED GOODS
1.1 The Consignor agrees to deliver to the Consignee, and the Consignee agrees to receive and hold on consignment, the following goods: [Goods Description] (the "Consigned Goods").
1.2 The Consigned Goods shall be sold at the following price(s): [Recommended Retail Price]. The Consignee shall not sell the Consigned Goods at a price below the agreed minimum price without the Consignor's prior written consent.
1.3 Title to the Consigned Goods remains with the Consignor at all times until the Consigned Goods are sold to a third party buyer and the sale proceeds have been received. The Consignee receives possession only and does not acquire title to the Consigned Goods.
1.4 The Consignee shall keep the Consigned Goods separately identified and distinguishable from the Consignee's own goods and from any other consigned goods held by the Consignee for any other party.
1.5 The Consignment Period shall be [Consignment Period]. At the expiry of the Consignment Period, the Consignee shall return all unsold Consigned Goods to the Consignor within 10 Business Days, in the same condition as received (fair wear and tear excepted), at the Consignee's cost and risk.
2. COMMISSION AND ACCOUNTING
2.1 In consideration of selling the Consigned Goods, the Consignee shall be entitled to a commission of [Commission Rate]% of the actual sale price received for each item of Consigned Goods sold (the "Commission").
2.2 The Consignee shall account to the Consignor [Accounting Period]. Each account must include: (a) a written statement listing all Consigned Goods sold during the accounting period, the sale price received for each item, and the Commission deducted; (b) payment to the Consignor of the net sale proceeds (being the total sale proceeds less the Commission) by direct bank transfer to the Consignor's nominated bank account.
2.3 The Consignee shall keep accurate records of all sales of Consigned Goods and shall make these records available for inspection by the Consignor on reasonable written notice.
2.4 The Consignee shall not apply any set-off, deduction, or counterclaim against the sale proceeds owed to the Consignor, except for the Commission expressly authorised under this Agreement.
3. RISK OF LOSS AND CARE OF GOODS
3.1 Risk of loss, theft, or damage: [Risk of Loss].
3.2 The Consignee shall store, display, and handle the Consigned Goods with reasonable care, in appropriate conditions, and in accordance with any care instructions provided by the Consignor.
3.3 The Consignee shall promptly notify the Consignor in writing of any loss, theft, or damage to Consigned Goods.
4. CONSIGNEE'S OBLIGATIONS
4.1 The Consignee shall: (a) use its reasonable commercial endeavours to sell the Consigned Goods; (b) not sell the Consigned Goods at below the agreed minimum price without written consent; (c) not pledge, charge, encumber, or purport to transfer title to the Consigned Goods; (d) comply with all applicable laws including the Australian Consumer Law in relation to the sale of the Consigned Goods; (e) collect payment from buyers in full before releasing goods to them, unless otherwise agreed in writing with the Consignor.
4.2 The Consignee shall not represent to any buyer or third party that it owns the Consigned Goods.
5. TERMINATION
5.1 Either party may terminate this Agreement on 14 days' written notice to the other party. On termination, the Consignee shall promptly return all unsold Consigned Goods to the Consignor and provide a final account of all sales and proceeds.
5.2 The Consignor may terminate this Agreement immediately and demand the return of all Consigned Goods if: (a) the Consignee commits a material breach and fails to remedy it within 5 Business Days of written notice; (b) the Consignee becomes insolvent, enters voluntary administration, receivership, or liquidation; or (c) the Consignee purports to sell, pledge, or encumber the Consigned Goods without authority.
6. GENERAL PROVISIONS
6.1 Governing Law: This Agreement is governed by the laws of [Governing State], Australia. Each party irrevocably submits to the non-exclusive jurisdiction of the courts of [Governing State] and the Federal Court of Australia.
6.2 Entire Agreement: This Agreement constitutes the entire agreement between the parties in relation to the consignment of the Consigned Goods and supersedes all prior negotiations and representations.
6.3 Amendments: No amendment of this Agreement shall be effective unless made in writing and signed by both parties.
6.4 Severability: If any provision of this Agreement is invalid or unenforceable, the remaining provisions continue in full force and effect.
6.5 Dispute Resolution: The parties shall endeavour to resolve any dispute by good faith negotiation. If unresolved within 15 Business Days, either party may refer the dispute to mediation or, if mediation fails, to the courts of [Governing State].
EXECUTION
IN WITNESS WHEREOF, the parties have executed this Consignment Agreement as of the date first written above.
Consignor: {{consignorName}}
________________
Signature
Date: ________________
Consignee: {{consigneeName}}
________________
Signature
Date: ________________
What Is a Consignment Agreement (Australia)?
A Consignment Agreement in Australia sets the commercial terms and each party's obligations for the arrangement, consistent with the Corporations Act 2001 (Cth).
Consignment arrangements are widely used in Australia across many industries and business models. Artisans, artists, crafters, and small manufacturers use consignment to place their products in galleries, boutique retail stores, markets, and online platforms without the retailer purchasing the stock outright. The arrangement gives the retailer the benefit of a wider product range without inventory risk, and gives the supplier access to retail distribution channels without the cost of establishing their own retail presence.
The legal framework governing Australian consignment arrangements has been significantly affected by the Personal Property Securities Act 2009 (Cth) (PPSA), which came into force on 30 January 2012. Before the PPSA, the common law's nemo dat principle broadly protected a consignor's title to consigned goods against the consignee's unsecured creditors. The PPSA changes this position for 'commercial consignments' — defined as consignments where the consignee deals in goods of that kind in the ordinary course of business and the goods have a value of AUD $5,000 or more per item. For such commercial consignments, the PPSA treats the consignor's interest as a security interest, which must be registered on the Personal Property Securities Register (PPSR) to be enforceable against third parties, including the consignee's creditors and liquidator.
A properly drafted Consignment Agreement protects both parties by clearly defining the consigned goods, the commission structure, the accounting and payment obligations, the PPSR registration arrangements, the allocation of risk, insurance requirements, and the procedure for returning unsold goods.
The legal framework governing the Consignment Agreement (Australia) in Australia draws on several key statutes and regulatory bodies. Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Parties executing a Consignment Agreement (Australia) in Australia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Corporations Act 2001 (Cth) sets the foundational requirements.
When Do You Need a Consignment Agreement (Australia)?
A Consignment Agreement is needed whenever one party (the supplier or manufacturer) wishes to place goods with another party (a retailer or dealer) for sale, without selling the goods outright to the retailer. Common scenarios where a Consignment Agreement is needed in Australia include the following.
Art and craft galleries: Artists and artisans placing their works with galleries for sale. The gallery earns a commission (typically 30–50% of the sale price) and returns unsold works at the end of the consignment period.
Boutique retail: Small manufacturers or designers placing their products — clothing, jewellery, homewares, food products — with boutique retailers, pop-up stores, or markets on a consignment basis.
Antiques and collectibles: Dealers placing high-value antiques, collectibles, or luxury goods with auction houses or specialist retailers.
Book publishing: Publishers placing books and publications with bookshops on a sale-or-return basis, which is a common industry practice in Australia.
Motor vehicles and equipment: Vehicle or machinery dealers placing stock with secondary dealers on consignment, particularly for high-value items where inventory finance is a significant cost.
Online marketplaces: Suppliers placing goods with online consignment platforms and marketplaces, where the platform sells on the supplier's behalf and remits proceeds less commission.
Wholesale to retail: Manufacturers or importers testing new products in the retail market on a consignment basis before committing to outright sale arrangements.
In all these scenarios, a written Consignment Agreement is essential to establish the parties' legal rights and obligations, particularly in relation to PPSR registration, risk of loss, and accounting for sale proceeds.
Parties in Australia should prepare a Consignment Agreement (Australia) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Consignment Agreement (Australia)
A thorough Australian Consignment Agreement should address the following key elements.
Description of Consigned Goods — The agreement must clearly identify the consigned goods, ideally with a Consignment Stock List as a schedule, specifying each item, its description, quantity, and recommended retail price. Clear identification of the goods is also important for PPSR registration purposes.
Retention of Title — The agreement must expressly state that title to the consigned goods remains with the Consignor at all times until the goods are sold to a third-party buyer. The Consignee's possession is as bailee only — it does not acquire ownership.
Commission Rate and Calculation — The commission payable to the Consignee must be specified (typically as a percentage of the actual sale price). The agreement should state whether commission is calculated inclusive or exclusive of GST.
Accounting and Payment Obligations — The agreement should specify the frequency of accounting (monthly, fortnightly, or quarterly), the content of each account statement, and the deadline for remitting net proceeds to the Consignor.
PPSR Registration — For commercial consignments of goods valued at AUD $5,000 or more per item, the Consignor should register a financing statement on the PPSR. The agreement should record this obligation and require the Consignee to cooperate with the registration process.
GST Treatment — The agreement should address whether both parties are GST-registered, how GST applies to the sale of goods and to the commission, and whether an RCTI arrangement will be used for the commission.
Risk of Loss and Insurance — The agreement should specify who bears the risk of loss, theft, or damage to the goods while in the Consignee's possession, and whether the Consignee is required to insure the goods.
Unsold Goods Return — The process and timeframe for returning unsold goods at the end of the consignment period or on termination must be clearly defined.
Termination Rights — The agreement should specify how either party can terminate the arrangement, and the consequences of termination, including immediate return of goods and final accounting.
Additional compliance elements for a Consignment Agreement (Australia) used in Australia include: Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Forms-legal.com provides this template as a starting point for Australia-compliant documentation.
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howpublished = {\url{https://forms-legal.com/australia/business/contracts/consignment-agreement-australia}},
note = {Free legal document template. Based on Corporations Act 2001 (Cth)}
}Also available for these jurisdictions:
Frequently Asked Questions
Yes, in most commercial consignment arrangements in Australia, PPSR registration is essential to protect the Consignor's title to the consigned goods. Under the Personal Property Securities Act 2009 (Cth) (PPSA), a 'commercial consignment' — where goods worth AUD $5,000 or more per item are delivered to a Consignee who deals in goods of that kind in the ordinary course of business — is treated as a security interest. Without a registered financing statement on the Personal Property Securities Register (PPSR), the Consignor's title will not be protected against the Consignee's secured creditors, or against a buyer who acquires the goods in the ordinary course of the Consignee's business without knowledge of the Consignor's interest. Registration must be made before or promptly after delivering the goods to the Consignee, using the Consignee's ACN, ABN, or individual details as the grantor. Consignors should seek legal or PPSR advice if they are unsure of the registration requirements for their specific goods.
GST treatment in Australian consignment arrangements can be complex and depends on whether the Consignee is acting as agent for the Consignor (so that the sale to the buyer is a supply by the Consignor, with the Consignee's commission being a separate supply of services) or as principal. In a standard consignment arrangement where the Consignee acts as agent, the Consignor is treated as making the taxable supply to the buyer, and must account for GST on the full sale price. The Consignee's commission is a separate taxable supply of services, on which the Consignee must account for GST. Parties who are both GST-registered may find it commercially convenient to use a recipient-created tax invoice (RCTI) arrangement, under which the Consignor (as recipient) issues the tax invoice for the Commission on behalf of the Consignee. An RCTI arrangement requires both parties to be GST-registered and meet specific ATO conditions. Both parties should obtain GST advice from a registered tax agent before commencing the consignment arrangement.
The allocation of risk for loss, theft, or damage to consigned goods while in the Consignee's possession is a matter of contract between the parties, and should be clearly addressed in the Consignment Agreement. There is no automatic rule under Australian law that places risk on either the Consignor or the Consignee — the position depends on the terms of the agreement and the circumstances of the loss. Commercially, many consignment agreements place the risk of loss, theft, and damage squarely on the Consignee, on the basis that the Consignee is in possession and control of the goods and is best placed to prevent and insure against such risks. Other agreements allocate risk more narrowly — for example, placing the risk of loss caused by the Consignee's negligence or misconduct on the Consignee, while leaving the risk of accidental damage (such as flood or fire) with the Consignor. Regardless of the allocation of risk, the Consignment Agreement should require the Consignee to maintain appropriate insurance over the consigned goods for their full replacement value, noting the Consignor as an interested party.
When a Consignment Agreement expires or is terminated, the Consignee is legally required to return all unsold consigned goods to the Consignor. Since the Consignor has retained title to the goods throughout the consignment period, the goods always belong to the Consignor — the Consignee never becomes the owner of unsold goods, regardless of how long they have been held. The Consignment Agreement should specify the timeframe within which the Consignee must return unsold goods (typically 5–14 Business Days), who bears the cost of return freight, and the condition in which goods must be returned. The Consignee should provide a final accounting statement at the same time, setting out all goods sold, the proceeds received, and the commission deducted. If the Consignee has registered a PPSR interest (which is rare — it is the Consignor who typically registers), that interest should be discharged on return of the goods.
Whether the Consignee can sell consigned goods on credit, layby, or instalment terms depends on what the Consignment Agreement permits. As a general matter, the Consignee should not release consigned goods to a buyer until payment in full has been received, because the Consignor's title only transfers to the buyer when the goods are sold and paid for. If the Consignee sells goods on credit and the buyer defaults, the Consignor may argue that no sale has occurred and that the goods (or their equivalent) remain the Consignor's property. Layby arrangements in Australia are regulated by the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)), which imposes specific obligations on sellers offering layby arrangements, including providing a written layby agreement and limiting cancellation fees. Consignors who permit layby sales of their goods should requires the Consignment Agreement addresses how layby proceeds are to be held and accounted for.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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