Consignment Agreement — Quebec

A Quebec Consignment Agreement (Contrat de consignation) is a legally binding contract governed by the Code civil du Québec in which the Consignor (the owner of goods) delivers goods to the Consignee (a retailer, gallery, or dealer) for sale on the Consignor's behalf. The Consignee sells the goods and remits the sale proceeds to the Consignor, minus a pre-agreed commission that compensates the Consignee for their sales efforts, display space, and customer relations.

A defining feature of consignment under Quebec civil law is that the Consignor retains full legal ownership of the consigned goods until the moment of their sale to a third-party buyer. The goods never become the property of the Consignee. This ownership structure distinguishes consignment from a regular sale or wholesale transaction, where title passes to the buyer upon delivery.

In Quebec's civil law framework, a consignment agreement has a dual legal character recognized by legal scholars and courts. First, it has characteristics of a mandate (mandat) under articles 2130–2185 of the Code civil du Québec: the Consignee acts as a mandatary (agent) of the Consignor, authorized to sell goods in the Consignor's name and for the Consignor's account. As a mandatary, the Consignee owes the Consignor duties of loyalty, prudence, diligence, and faithful accounting (reddition de comptes). Second, it has characteristics of a deposit (dépôt) under articles 2280–2311 CCQ: the Consignee receives goods and holds them for the benefit of the Consignor, with an obligation to safeguard, preserve, and ultimately return them if unsold.

An important practical consideration in Quebec consignment arrangements is the potential need to register the Consignor's ownership reservation in the Register of Personal and Movable Real Rights (Registre des droits personnels et réels mobiliers — RDPRM) under articles 2934+ CCQ. Without RDPRM registration, the Consignor's title may not be enforceable against the Consignee's creditors or trustee in bankruptcy if the Consignee becomes insolvent. Registration at the RDPRM provides public notice of the Consignor's ownership and protects their interest against third parties.

Consignment arrangements are widely used in Quebec for artisanal goods, artwork, crafts, vintage and secondhand clothing, antiques, specialty foods, and collectibles. They allow producers and creators to reach retail markets without the upfront capital risk of selling to a wholesaler, while allowing retailers to carry a broader inventory without purchasing it outright.

You need a Quebec Consignment Agreement when:

Artists and Artisans Selling Through Galleries — A visual artist, photographer, jeweller, ceramic artist, or craftsperson wants to place their works for sale in a gallery, boutique, or artisan shop without selling the works outright to the retailer. The consignment model allows the artist to retain ownership until a buyer is found and confirms they receive the majority of the sale price.

Vintage and Secondhand Clothing Stores — A seller wants to place clothing, accessories, or vintage items in a consignment shop. The consignment arrangement allows the store to display and sell the items without purchasing them, while the seller retains title until each item is sold.

Antique Dealers and Collectors — An antique collector or estate executor wants to place items with an antique dealer for sale, retaining ownership of each piece until it finds a buyer. The consignment agreement defines the dealer's commission, the minimum acceptable price, and the timeline for sale or return.

Specialty Food Producers — A Quebec artisan food producer (cheese, honey, preserves, craft beverages) wants to place products in a specialty food store or épicerie fine on consignment, without the financial risk of a wholesale transaction.

Furniture and Home Décor — A seller wants to place high-value furniture or home décor items with a consignment store or auction house, retaining ownership until sold.

Book Publishers and Independent Authors — An independent author or small publisher places books with a bookstore on a consignment basis, receiving payment only for copies sold rather than selling the entire print run to the retailer.

Equipment and Machinery — A business wants to place used equipment or machinery with a dealer or broker for sale on a commission basis, retaining title to the equipment until a buyer is found.

Art and Exhibition Curators — An organization receives works on loan from multiple artists for an exhibition or pop-up sale, with the intent to sell works during the event and remit proceeds to each artist.

Without a written consignment agreement, disputes commonly arise about commission rates, who bears the risk of loss or theft, the minimum acceptable price, how quickly proceeds must be remitted, and what happens to unsold goods. A detailed written agreement prevents these disputes and provides a clear legal framework under Quebec civil law.

Identification of Consignor and Consignee — Full legal names, addresses, and authorized representatives. The Consignor is the owner; the Consignee is the seller acting as mandatary and depositary.

Description of Consigned Goods — A precise, detailed description of all goods placed on consignment, including quantities, descriptions, serial numbers, unique identifiers, or inventory lists attached as an annex. The description defines what is subject to the consignment arrangement.

Declared Value of Goods — The total declared value of all consigned goods, used to determine insurance coverage requirements and as a basis for calculating liability in case of loss or damage.

Pricing Authority — Clearly specify who has the authority to set the retail selling price: the Consignor (who knows the value of their goods and may have brand pricing policies), the Consignee (who knows the market and customer base), or both by mutual agreement. Include any minimum floor price below which the Consignee cannot sell without the Consignor's written consent.

Commission Rate — The percentage of the selling price retained by the Consignee as their compensation. Market rates vary by industry; the rate should reflect the Consignee's overhead, display costs, and sales effort. Specify whether the commission is calculated on the pre-tax or post-tax selling price.

Remittance of Sale Proceeds — The frequency (monthly, quarterly, per sale) and method (bank transfer, certified cheque, Interac) by which the Consignee must remit net sale proceeds to the Consignor. Include reporting requirements: itemized sales statements showing each item sold, selling price, commission retained, and net amount remitted.

Insurance Obligations — Who bears the risk of loss or damage to consigned goods while in the Consignee's possession, and what insurance the Consignee must maintain. The Consignor may require the Consignee to carry commercial general liability insurance and property insurance covering the full declared value of the consigned goods.

Return of Unsold Goods — The timeline and process for returning unsold goods at the end of the consignment period or upon termination. Specify who bears the cost of return shipping, and the condition in which goods must be returned.

Term and Termination — The start and end date of the initial consignment period, conditions for early termination (with or without cause), and required notice periods. Specify what happens to pending sales and outstanding proceeds upon termination.

RDPRM Registration — Whether the Consignor will register their ownership reservation at Quebec's RDPRM (Register of Personal and Movable Real Rights) under CCQ arts. 2934+ to protect their title against the Consignee's creditors and third parties in good faith.

Good Faith Obligation (art. 1375 CCQ) — Both parties, and particularly the Consignee as mandatary, must act in good faith throughout the consignment relationship.

Governing Law — Quebec civil law (CCQ), the Consumer Protection Act (RLRQ, c. P-40.1) if consumer sales are involved, and Quebec's tax laws including the Act respecting the Québec Sales Tax.