Consignment Agreement (Canada)
This Consignment Agreement (hereinafter referred to as the "Agreement") is entered into on [Effective Date] (the "Effective Date") by and between:
[Consignor Name], [Consignor Type], with an address at [Consignor Address], [Consignor City], [Consignor Province] [Consignor Postal Code] (hereinafter the "Consignor"); and
[Consignee Name], [Consignee Type], with an address at [Consignee Address], [Consignee City], [Consignee Province] [Consignee Postal Code] (hereinafter the "Consignee"),
collectively referred to as the "Parties" and individually as a "Party".
WHEREAS the Consignor owns certain goods and desires to increase the sales and distribution of such goods through a consignment arrangement;
WHEREAS the Consignee wishes to display, promote, and sell the Consignor’s goods on behalf of the Consignor in accordance with the terms and conditions set out herein;
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Subject of the Agreement
The Consignor agrees to deliver, and the Consignee agrees to accept for the purpose of sale on consignment, the following goods (the "Consigned Goods"): [Goods Description].
The Parties acknowledge that the total estimated fair market value of the Consigned Goods at the date of delivery is CAD $[Estimated Value].
Title and Ownership
The Consigned Goods shall at all times remain the sole and exclusive property of the Consignor until sold to a third-party buyer in the ordinary course of business. The Consignee acknowledges that it has no ownership interest in the Consigned Goods and that the Consigned Goods are not assets of the Consignee for any purpose, including for the benefit of the Consignee’s creditors.
The Consignor warrants that it is the lawful owner of the Consigned Goods, that the goods are free and clear of all liens, charges, encumbrances, and security interests (other than any PPSA registration made pursuant to this Agreement), and that the Consignor has full right, power, and authority to consign the goods under this Agreement.
Personal Property Security Act (PPSA)
The Parties acknowledge that the consignment of goods may create a security interest under the applicable provincial Personal Property Security Act. Each Party is responsible for obtaining independent legal advice regarding their respective rights and obligations under the PPSA.
Pricing and Commission
The Consignee shall sell the Consigned Goods at prices determined by the Consignee, provided that no item shall be sold for less than the agreed minimum price of CAD $[Minimum Price] (the "Minimum Price") without the Consignor’s prior written consent. The commission structure is based on [Commission Type]. If any item is sold below the Minimum Price without authorisation, the Consignor shall be entitled to receive the same payment as if the item had been sold at the Minimum Price.
Payment of Sales Proceeds
The Consignee shall remit the Consignor’s share of the sales proceeds (the "Net Proceeds") within [Proceeds Days] days [Proceeds Basis] by way of [Payment Method]. The Consignee shall hold all sales proceeds in trust for the Consignor until remitted and shall not commingle such funds with the Consignee’s own funds.
The Consignee shall maintain accurate books and records of all transactions involving the Consigned Goods, including the date of each sale, the identity of each buyer, the sale price, any applicable taxes collected, and the Commission retained. The Consignor shall have the right to inspect such records upon reasonable written notice during normal business hours.
GST/HST and Tax Obligations
The [Gst Responsibility] shall be responsible for collecting and remitting the applicable Goods and Services Tax (GST), Harmonized Sales Tax (HST), or Provincial Sales Tax (PST) on each sale of the Consigned Goods in accordance with the Excise Tax Act (Canada) and applicable provincial legislation. The Consignee’s GST/HST registration number is [Consignee GST Number]. Each Party shall be responsible for its own income tax obligations arising from this Agreement, including any reporting required by the Canada Revenue Agency (CRA).
Delivery and Shipping
The Consignor shall deliver the Consigned Goods to the Consignee at the consignment premises located at [Display Location]. The [Delivery Responsibility] shall bear all costs of freight, shipping, and delivery. Risk of loss or damage to the Consigned Goods shall pass to the Consignee upon delivery and acceptance at the consignment premises.
Display, Storage, and Care of Goods
The Consignee shall display and store the Consigned Goods at [Display Location] in a manner that is [Separate Storage] from the Consignee’s own inventory. The Consignee shall exercise reasonable care in the handling, display, and storage of the Consigned Goods and shall protect them from damage, theft, deterioration, and environmental hazards. The Consignee shall not remove, alter, or obscure any labels, markings, or identifying information on the Consigned Goods without the Consignor’s prior written consent.
Insurance
The Consignee shall be solely responsible for any loss, theft, or damage to the Consigned Goods while they are in the Consignee’s possession, custody, or control. The Consignee shall compensate the Consignor for the fair market value of any Consigned Goods that are lost, stolen, or damaged beyond repair.
Return of Unsold Goods
The Consignor may demand the return of any or all unsold Consigned Goods by providing the Consignee with [Return Notice Days] days’ prior written notice. Upon receiving such notice, the Consignee shall return the specified goods in the same condition as received, reasonable wear and tear excepted. The [Return Shipping Cost] shall bear the cost of return shipping. Upon termination of this Agreement for any reason, the Consignee shall return all unsold Consigned Goods to the Consignor within [Return Notice Days] days.
Defective Goods and Warranties
The Consignor warrants that the Consigned Goods are in good and merchantable condition, free from material defects, and suitable for sale in accordance with the applicable provincial Sale of Goods Act. The Consignor shall be responsible for any defects that existed at the time of delivery. The Consignee shall not be held liable for defects or damages that existed prior to delivery of the Consigned Goods.
If a Consigned Good is found to be defective, the Consignee shall promptly notify the Consignor in writing, providing a detailed description of the defect and any supporting documentation or evidence. The Consignor shall, at its own expense, [Defective Action] within a reasonable time after receiving the returned defective item.
Liability and Indemnification
The Consignor shall indemnify and hold harmless the Consignee from any and all claims, damages, losses, costs, and expenses (including reasonable legal fees) arising out of or related to defects in the Consigned Goods, breach of the Consignor’s warranties, or infringement of any third party’s intellectual property rights, unless such claims arise from the gross negligence or wilful misconduct of the Consignee.
The Consignee shall indemnify and hold harmless the Consignor from any and all claims, damages, losses, costs, and expenses (including reasonable legal fees) arising out of the Consignee’s handling, storage, display, or sale of the Consigned Goods, including any injury to persons or property occurring at the consignment premises.
Neither Party shall be liable to the other for any indirect, incidental, consequential, special, or punitive damages, including loss of profits or business opportunities, arising out of or in connection with this Agreement, even if such Party has been advised of the possibility of such damages.
Default and Remedies
If either Party fails to perform any material obligation under this Agreement (a "Default"), the non-defaulting Party shall provide written notice of the Default (the "Default Notice") and allow the defaulting Party [Cure Period Days] days to cure the Default. If the Default is not cured within the specified period, the non-defaulting Party may: (a) declare all outstanding sales proceeds immediately due and payable; (b) demand the immediate return of all Consigned Goods; (c) terminate this Agreement without further notice; and (d) pursue any and all remedies available at law or in equity.
Term and Termination
This Agreement shall commence on the Effective Date and shall remain in effect until [End Date] (the "End Date"), unless earlier terminated in accordance with this Agreement. Upon expiry, this Agreement [Termination Procedure].
Either Party may terminate this Agreement at any time by providing [Termination Notice Days] days’ prior written notice to the other Party. Upon termination, the Consignee shall: (a) immediately cease all sales of the Consigned Goods; (b) remit all outstanding Net Proceeds to the Consignor within [Proceeds Days] days; (c) return all unsold Consigned Goods in their current condition; and (d) provide a final accounting of all transactions.
Governing Law and Dispute Resolution
This Agreement shall be governed by and construed in accordance with the laws of the Province of [Governing Law] and the applicable federal laws of Canada. The Parties hereby irrevocably submit to the exclusive jurisdiction of the courts of the Province of [Governing Law] for the resolution of any disputes arising under or in connection with this Agreement.
General Provisions
Entire agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, warranties, commitments, and agreements, whether written or oral.
Amendments. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless made in writing and signed by both Parties.
Severability. If any provision of this Agreement is found to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be severed from this Agreement, and the remaining provisions shall continue in full force and effect.
Assignment. Neither Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of the other Party, except that the Consignor may assign this Agreement to a successor in interest upon written notice to the Consignee.
Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed duly given when delivered personally, sent by registered mail, or sent by email to the addresses set out above. Notice by registered mail shall be deemed received five (5) business days after posting.
Binding effect. This Agreement shall be binding upon and enure to the benefit of the Parties and their respective heirs, executors, administrators, successors, and permitted assigns.
Independent parties. Nothing in this Agreement shall create or be deemed to create a partnership, joint venture, agency, or employment relationship between the Parties. The Consignee is an independent contractor and not an agent or employee of the Consignor.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
THE CONSIGNOR
Name: [Consignor Name]
Address: [Consignor Address], [Consignor City], [Consignor Province] [Consignor Postal Code]
Phone: [Consignor Phone]
Email: [Consignor Email]
THE CONSIGNEE
Name: [Consignee Name]
Address: [Consignee Address], [Consignee City], [Consignee Province] [Consignee Postal Code]
Phone: [Consignee Phone]
Email: [Consignee Email]
Party 1
________________
Signature
Date: ________________
Party 2
________________
Signature
Date: ________________
What Is a Consignment Agreement (Canada)?
A Consignment Agreement in Canada lets a consignor place goods with a consignee for sale and sets the commission and settlement terms, governed primarily by provincial personal-property security and sale-of-goods law.
The Personal Property Security Act 1990 (Ontario), the Personal Property Security Act 1996 (BC), and the Personal Property Security Act 2000 (Alberta) each treat certain consignments as deemed security interests. Under Section 2 of the Ontario Act, a commercial consignment where the consignee deals in goods of that kind is treated as a security interest requiring registration of a financing statement through ServiceOntario. Without this PPSA filing, the consignor's title may be subordinate to the claims of the consignee's secured creditors under the Bankruptcy and Insolvency Act 1985 — meaning that if the consignee becomes insolvent, a Licensed Insolvency Trustee may distribute the consigned goods to secured creditors despite the consignor retaining legal ownership. Registration must be completed before delivery of goods to the consignee to establish priority.
GST/HST treatment of consignment sales is governed by the Excise Tax Act 1985, administered by the Canada Revenue Agency (CRA). Section 177 of the Excise Tax Act 1985 addresses agent sales: the consignee collects and remits GST/HST on the full sale price, while the consignor accounts for the tax on proceeds received. The CRA's GST/HST Memoranda Series sets out the deemed supply rules for consignment arrangements. Both consignor and consignee should include their CRA Business Numbers in the agreement and confirm whether the small supplier exemption under Section 148 of the Excise Tax Act 1985 (CAD $30,000 annual revenue threshold) applies to either party. Under the Competition Act 1985, Section 76 prohibits resale price maintenance — consignors must frame minimum price provisions carefully to avoid Competition Bureau enforcement action. The Personal Information Protection and Electronic Documents Act 2000 (PIPEDA) and provincial Privacy Acts 2003 (Alberta PIPA, BC PIPA) govern collection of customer data by consignees who maintain buyer purchase records, requiring collection limitation, purpose specification, and consent under Schedule 1 of the Act 2000.
The Sale of Goods Act 1990 (Ontario) and the Sale of Goods Act 1996 (BC) provide default rules for the passing of property and risk in goods transactions. However, a consignment agreement explicitly overrides these defaults by confirming that title does not pass to the consignee at any point — the consignee holds the goods as bailee and agent, not as purchaser. Under the Factors Act 1990 (Ontario), Section 2, a mercantile agent in possession of goods with the owner's consent can pass good title to a bona fide purchaser for value without notice — making a signed written consignment agreement (and PPSA registration) essential to put buyers on notice that the consignee is not the owner. The Limitations Act 2002 (Ontario), Section 4 imposes a two-year basic limitation period on contract claims, so consignors should act promptly if a consignee fails to remit proceeds or return unsold goods.
When Do You Need a Consignment Agreement (Canada)?
A Canadian Consignment Agreement is needed whenever a product owner places goods with a third party for sale without transferring ownership. Art galleries displaying and selling artwork for artists represent the classic consignment arrangement — the gallery takes a commission (typically 40-60%) on each sale while the artist retains ownership until the work is sold. Antique dealers, vintage clothing boutiques, and secondhand stores frequently operate on consignment models governed by provincial sale of goods legislation.
Consignment agreements are essential for emerging consumer product brands placing merchandise with retail stores on a trial basis — the retailer takes no inventory risk because unsold goods are returned to the consignor under Section 3 of the applicable provincial Sale of Goods Act 1990 (Ontario) or Sale of Goods Act 1996 (BC). Craft producers, artisans, and small-batch manufacturers who cannot afford traditional wholesale distribution use consignment to access retail shelf space without the retailer committing to purchase the inventory outright.
Book publishers consigning inventory to bookstores, jewelry designers placing pieces with boutiques, and furniture makers placing showroom pieces with interior design firms all require consignment agreements. The agreement is also used for industrial equipment demonstrations, where a manufacturer places equipment with a potential customer for evaluation before a purchase decision. Under Section 11 of the Bankruptcy and Insolvency Act 1985, a trustee in bankruptcy may treat unregistered consigned goods as the insolvent consignee's property.
Parties in Canada should execute a consignment agreement before delivering any goods to the consignee. Under Section 2 of the Personal Property Security Act 1990 (Ontario), unregistered consignors lose priority over registered secured creditors — confirmed by the Supreme Court of Canada in Re Giffen [1998] 1 SCR 91. Regulated goods require additional compliance: firearms under the Firearms Act 1995, Section 23 and Royal Canadian Mounted Police authorization; food products under the Safe Food for Canadians Act 2012, Section 6 and Canadian Food Inspection Agency (CFIA) oversight; and alcohol subject to provincial liquor boards including the Liquor Control Board of Ontario (LCBO), BC Liquor Distribution Branch (BCLDB), and Alberta Gaming Liquor and Cannabis (AGLC) under the Gaming Liquor and Cannabis Act 2020, Section 3. The Limitations Act 2002 (Ontario) and Limitation Act 2012 (BC) impose two-year limitation periods on contract claims arising from consignment disputes, reinforcing the need for timely legal action when a consignee fails to remit proceeds or return unsold goods.
What to Include in Your Consignment Agreement (Canada)
A thorough Canadian Consignment Agreement must identify the consignor and consignee with full legal names, business addresses, and GST/HST registration numbers. The consigned goods must be described in detail — including quantities, descriptions, serial numbers or SKUs where applicable, and the agreed value of each item as of the consignment date.
The pricing structure must specify the minimum sale price (below which the consignee cannot sell without written authorization), the consignee's commission rate or markup, and how the consignor's net proceeds are calculated. Payment terms should define when the consignee must remit sale proceeds to the consignor — typically within 15-30 days of each sale — and the payment method in Canadian dollars. Periodic inventory reconciliation statements should be provided at least monthly.
A PPSA registration clause is essential — under Section 2 of the Personal Property Security Act 1990 (Ontario), the consignor must file a financing statement to protect their ownership interest against the consignee's creditors under the Bankruptcy and Insolvency Act 1985. The consignee should consent to this registration in writing. The Personal Property Security Act 2000 (Alberta) and Personal Property Security Act 1996 (BC) contain equivalent Section 3 requirements for deemed security interest registration. In Quebec, the consignor must register a hypothèque mobilière under Section 2683 of the Civil Code 1991 through the RDPRM registry.
Insurance requirements must specify that the consignee will maintain commercial property insurance covering the full agreed value of consigned goods against theft, fire, flood, and other perils — with the consignor named as loss payee or additional insured, as regulated by the Financial Services Regulatory Authority of Ontario (FSRA) under the Insurance Act 1990 (Ontario). Include provisions for the return of unsold goods — the notice period, condition requirements, and who bears return shipping costs. The consignee's obligations regarding display, storage, and care of the goods should be specified, along with minimum display standards.
GST/HST compliance provisions are mandatory under the Excise Tax Act 1985, Section 177. Both parties should include their CRA Business Numbers. The Income Tax Act 1985, Section 9 governs how consignor proceeds are reported as business income. For Quebec-based parties, Revenu Québec administers QST under the Taxation Act 1991 (Quebec), Section 1 — the QST rate is 9.975% in addition to federal GST. Record-keeping obligations under Section 230 of the Income Tax Act 1985 require the consignee to maintain accurate inventory records for CRA audit purposes. Dispute resolution clauses should specify the Ontario Superior Court of Justice, BC Supreme Court, or Alberta Court of King's Bench as the forum for litigation. Under the Competition Act 1985, Section 76, minimum resale price terms must be structured as non-binding recommendations to avoid price maintenance liability. The Sale of Goods Act 1990 (Ontario) and Sale of Goods Act 1996 (BC) govern default title and risk rules, but the consignment agreement must expressly override Section 19 of the Sale of Goods Act 1990 to confirm that property and risk in the goods do not pass to the consignee at any time. The Factors Act 1990 (Ontario), Section 2 allows a mercantile agent in possession of goods to pass good title to a bona fide purchaser — making PPSA registration and written consignment terms critical to protect the consignor against unauthorized dispositions. Cross-border consignments importing goods into Canada must also comply with the Customs Act 1985, Section 32, administered by the Canada Border Services Agency (CBSA), which may classify consignment shipments differently from outright sales for duty assessment purposes. The consignment agreement should address customs duties allocation and identify who bears duty costs if goods are returned to a foreign consignor. Forms-legal.com provides this template as a starting point for Canada-compliant consignment documentation.
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Forms Legal. (2026). Consignment Agreement (Canada) (Canada) [Legal document template]. Forms Legal. https://forms-legal.com/canada/business/contracts/consignment-agreement-canada
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title = {Consignment Agreement (Canada) (Canada)},
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howpublished = {\url{https://forms-legal.com/canada/business/contracts/consignment-agreement-canada}},
note = {Free legal document template. Based on Canada Business Corporations Act (R.S.C. 1985, c. C-44)}
}Also available for these jurisdictions:
Frequently Asked Questions
Yes — in most Canadian provinces, a commercial consignment may be treated as a deemed security interest under the Personal Property Security Act (PPSA), and registration of a financing statement is critical to protect the consignor's title. Under Ontario's PPSA (R.S.O. 1990, c. P.10, s. 2), a consignment where the consignee deals in goods of that kind in the ordinary course of business is treated as a security interest unless the consignor files a PPSA financing statement through the ServiceOntario Personal Property Security Registration system. Without PPSA registration, if the consignee becomes insolvent or files for bankruptcy under the Bankruptcy and Insolvency Act (R.S.C. 1985, c. B-3), the Licensed Insolvency Trustee administering the estate may treat the consigned goods as property of the insolvent consignee and distribute them to secured creditors — leaving the consignor with only an unsecured claim. British Columbia's Personal Property Security Act (R.S.B.C. 1996, c. 359) and Alberta's Personal Property Security Act (R.S.A. 2000, c. P-7) contain equivalent deemed security interest provisions. In Quebec, the Civil Code of Quebec (CQLR, c. CCQ-1991) governs security interests in moveable property through hypothèques mobilières, and registration is made through the Registre des droits personnels et réels mobiliers (RDPRM). Registration should be completed before the consigned goods are delivered to the consignee to establish priority over prior secured creditors.
GST/HST treatment of consignment sales in Canada involves both the consignee and the consignor, governed by the Excise Tax Act (R.S.C. 1985, c. E-15) administered by the Canada Revenue Agency (CRA). The consignee collects GST/HST (5% federal, or 13% HST in Ontario, 15% in Atlantic provinces) from the end customer on the full sale price and remits it to the CRA. Under the CRA's administrative policy for consignment sales, the consignor is deemed to have made a taxable supply to the consignee when the goods are sold to the end customer — if the consignor is registered for GST/HST, they must account for the tax on the proceeds they receive (typically the sale price less the consignee's commission). Both the consignor and consignee should include their GST/HST Business Numbers in the consignment agreement to ensure proper invoicing. If the consignor is a small supplier (annual revenue below CAD $30,000) and not registered for GST/HST, the CRA generally treats the consignee as the deemed supplier for GST/HST purposes. The consignment agreement should expressly specify whether the consignee's commission is calculated before or after GST/HST, and who bears the tax on the commission itself. The Competition Bureau under the Competition Act (R.S.C. 1985, c. C-34) may scrutinize consignment arrangements that fix resale prices across multiple retailers as potential price maintenance violations under Section 76.
Insurance responsibility for consigned goods in Canada is a critical risk allocation issue that must be specified in the consignment agreement. The consignee, as the party in physical possession and control of the goods, is generally obligated to maintain commercial property insurance covering the consigned goods against theft, fire, water damage, and accidental damage. The agreement should require coverage equal to the agreed value of all consigned goods, with the consignor named as loss payee or additional insured — giving the consignor a direct claim against the insurer without having to sue the consignee first. Provincial insurance regulators including the Financial Services Regulatory Authority of Ontario (FSRA), BC Financial Services Authority (BCFSA), and Alberta Insurance Council (AIC) regulate insurers in each province but impose no mandatory consignment coverage minimums, making contractual specification essential. If the consignee fails to maintain adequate insurance, the consignor's remedy is a breach of contract claim before the Ontario Superior Court of Justice, BC Supreme Court, or Alberta Court of King's Bench. The agreement should also address risk of loss during transport of goods to and from the consignee, and require the consignee to provide a certificate of insurance before goods are delivered.
A Consignment Agreement (Canada) does not legally require a lawyer in Canada, and individuals and businesses may draft and execute the document independently. The Canada Business Corporations Act (R.S.C. 1985, c. C-44) does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified Canada lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Federal Court of Canada has jurisdiction over disputes arising from this type of document, and Corporations Canada may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.
A Consignment Agreement (Canada) does not legally require a lawyer in Canada, though legal advice is recommended for complex transactions. Under Canadian law, individuals may draft and execute this type of document independently. The Competition Act (R.S.C. 1985, c. C-34) provides consumer protections. However, Corporations Canada, the Canada Revenue Agency (CRA), or provincial regulatory bodies may have specific requirements. For property transactions, provincial land title offices require qualified lawyers or notaries. PIPEDA and provincial privacy legislation impose obligations on parties handling personal data. Where disputes arise, provincial superior courts or the Federal Court of Canada have jurisdiction. Forms-legal.com provides this template as a starting point — always review with a qualified Canadian lawyer for significant transactions.
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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