Do I need to register on the PPSR for a consignment arrangement in Australia?

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.

How is GST handled in a consignment arrangement in Australia?

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.

Who is liable if consigned goods are damaged or stolen from the Consignee's premises?

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.

What happens to unsold consigned goods when the agreement ends?

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.

Can the Consignee sell consigned goods on credit or layby?

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 ensure the Consignment Agreement addresses how layby proceeds are to be held and accounted for.

Consignment Agreement (Australia) — Australia

Create an Australian Consignment Agreement for the sale of goods on consignment. Covers retention of title by the Consignor, commission rate and accounting obligations, PPSR registration under the Personal Property Securities Act 2009 (Cth), GST treatment, risk of loss, insurance requirements, unsold goods return, and termination. Suitable for artisans, manufacturers, wholesalers, and retailers across all Australian states and territories. A consignment arrangement allows a supplier (the Consignor) to place goods with a retailer or dealer (the Consignee) for sale, without transferring ownership of the goods until they are actually sold to a third-party buyer. The Consignee earns a commission on each item sold and accounts to the Consignor for the balance of the sale proceeds. This structure is widely used in Australia by artists, artisans, small manufacturers, and wholesalers who supply galleries, boutique retailers, markets, and online platforms on a consignment basis. The most critical legal consideration for Australian consignment arrangements is the Personal Property Securities Act 2009 (Cth) (PPSA). Prior to the PPSA coming into force in 2012, the common law principle of nemo dat quod non habet meant that a Consignor's title to consigned goods was generally protected against the Consignee's unsecured creditors. The PPSA fundamentally changed this position: under the PPSA, a commercial consignment (where the goods have a value of AUD $5,000 or more per item and the Consignee deals in goods of that kind) is treated as a security interest. This means that the Consignor must register a financing statement on the Personal Property Securities Register (PPSR) at ppsr.gov.au to protect its title to the consigned goods against the Consignee's creditors and buyers in the ordinary course of business. If the Consignor fails to register, it risks losing title to the goods if the Consignee becomes insolvent or sells the goods to a buyer without notice of the Consignor's interest. From a GST perspective, consignment sales involve two separate supplies: the supply of goods by the Consignor to the buyer (which the Consignee facilitates as agent), and the supply of selling services by the Consignee to the Consignor (for which the Commission is paid). Both supplies may be taxable supplies under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) if both parties are registered for GST. The parties should consider whether a recipient-created tax invoice (RCTI) arrangement is appropriate for the Commission payments. Australian Consumer Law obligations also apply to the sale of consigned goods. The Consignee, as the party selling the goods to consumers, must comply with the consumer guarantee provisions of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)), including the guarantees as to acceptable quality and fitness for purpose. The Consignment Agreement should address how returns and warranty claims from consumers will be handled between the Consignor and Consignee.

What Is a Consignment Agreement (Australia)?

An Australian Consignment Agreement is a contract between a Consignor (the supplier or owner of goods) and a Consignee (the retailer, dealer, or agent) under which the Consignor delivers goods to the Consignee for sale, while retaining ownership of the goods until they are actually sold to an end buyer. The Consignee earns a commission on each sale and accounts to the Consignor for the net proceeds. Unlike a straightforward sale, in a consignment arrangement the Consignee never acquires title to the goods — the goods remain the Consignor's property until sold, and unsold goods must be returned at the end of the consignment period.

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.

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.

What to Include in Your Consignment Agreement (Australia)

A comprehensive 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.

What Is a Consignment Agreement (Australia)?

When Do You Need a Consignment Agreement (Australia)?

What to Include in Your Consignment Agreement (Australia)

Frequently Asked Questions

Related Documents

Distribution Agreement (Australia)

Agency Agreement (Australia)

Supply Agreement (Australia)

Non-Disclosure Agreement (NDA) (Australia)