Steps to establish a standard goods consignment contract

Goods consignment contracts are one of the important legal tools in commercial activities, especially for businesses trading in goods. Establishing a consignment contract not only helps the parties protect their legal rights but also creates a solid basis for resolving disputes in case problems arise. In the following article, Long Phan will send customers detailed information about goods consignment contracts.

What is a goods consignment contract?

• A consignment contract is a written agreement between the owner of the goods (the consignor) and the consignee, under which the consignor transfers temporary management of its goods to the consignee to carry out activities such as storage, distribution, or sales.
• This is a legal contract, intended to ensure the rights and obligations of the parties, especially when there are remunerations and commissions for the consignee.
• In addition, by its nature, goods consignment activities are considered entrusted goods purchase and sale activities as prescribed in Article 155 of the Law on Commercial 2005.

Steps to establish a goods consignment contract

To establish a goods consignment contract in accordance with the law, specific steps include:

Step 1: Determine the subject of the contract

The subjects of the goods consignment contract must meet the legal conditions on civil and commercial capacity:

• Consignor (trustee): Can be the individual or organization that owns the goods and is responsible for the origin and legality of the consigned goods. This subject does not necessarily have to be a trader.
• Consignee (trustee): Must be a trader with business registration appropriate to the entrusted industry, capable of providing management, storage, or distribution services of goods.

Step 2: Determine the contract object

The subject of the consignment contract is goods that are legally circulated according to the provisions of the law. According to the Law on Commercial 2005, commonly consigned items include:

• Consumer goods, cosmetics, jewelry, fashion and other common products in daily life.
• Note that prohibited goods or dangerous goods such as weapons and toxic substances are not allowed as consignments.

Step 3: Draft and create a goods consignment contract

The goods consignment contract must have main provisions to clearly define the rights and obligations between the parties:

• Information of the consignor and consignee: Clearly state the names, addresses, and legal information of the parties to the contract.
• Description of consigned goods: Details on quantity, quality, condition, value and other characteristics of the goods to ensure accuracy upon handover.
• Remuneration, costs and commissions: Clearly stipulate deposit fees, commissions and related costs, helping to avoid disputes.
• Contract term and delivery method: Clearly define the deposit term, time and delivery method. In particular, the contract needs to include a sample delivery record and necessary appendices to ensure accuracy when delivering goods.

Step 4: Sign the contract and notarize (if necessary)

The parties proceed to sign a goods consignment contract. Although notarization is not required, this will help increase the legal value of the contract and ensure the rights of the parties, especially with high-value goods or long-term contracts.

Things to keep in mind when signing a goods consignment contract

To ensure that the goods consignment contract meets standards and protects legal rights, the parties need to pay attention to the following factors:

Subject of the contract

The subject of a goods consignment contract must meet the conditions of legal capacity and voluntariness in the transaction. Accordingly:

• Consignor (entrusting party): is a trader or not a trader who entrusts the entrusted party to buy and sell goods according to his or her request and must pay the entrusted remuneration.
• Consignee (trustee): Must be a trader dealing in goods consistent with the entrusted goods and buy and sell goods according to the conditions agreed with the trustee.

CSPL: Articles 156, 157 Law on Commercial 2005.

Subjects of the goods consignment contract

Consigned goods must be goods allowed for circulation and not on the prohibited list. To limit risks, the consignee needs to carefully check the information and origin of the goods, especially for goods with special preservation requirements such as food, pharmaceuticals or flammable goods.

Rights and obligations of the parties in the contract

According to Articles 162, 163, 164, 165 of the Law on Commercial 2005, the rights and obligations of the parties in a goods consignment contract include:

Rights and obligations of the consignor (trusting party):

• Request the consignee to provide information about the goods situation and consignment progress.
• Not responsible if the consignee violates the law.
• Provide the necessary documents and information for the deposition.
• Pay remuneration to the consignee, deliver money and goods according to the agreement.

Rights and obligations of the consignee (trustee):

• Carry out tasks related to management, storage, and distribution of goods as required by the consignor.
• Receive reasonable remuneration, commissions and expenses from the consignor.
• Return goods or money as committed.

Consulting services, instructions on the steps to establish a standard goods consignment contract at Long Phan

Long Phan provides comprehensive consulting services to support customers in the process of establishing and implementing goods consignment contracts, including:

• Consulting on the rights and obligations of the parties in the contract, ensuring that the contract terms comply with the law.
• Providing services of drafting goods consignment contracts according to customer requirements and needs.
• Instructions on establishing basic conditions in consignment contracts such as value of goods, time of consignment, responsibility for preserving and transporting goods, payment regulations…
• Check the legality and reasonableness of the terms in the drafted or signed deposit contract.
• Support negotiations and negotiation with parties.
• Support businesses in registering deposit contracts at competent state agencies (if any).
• Consulting to resolve when a dispute occurs.

Establishing a standard goods consignment contract is an important step to ensure the rights of participating parties and compliance with regulations. The steps to establish a contract, from agreeing on terms, choosing an appropriate deposit method, to protecting rights and resolving disputes, all need to be done in detail and carefully. For detailed advice and support in establishing a standard goods consignment contract, please contact Long Phan via hotline the 0906735386.