What Is Consignment Business?
Consignment is a special kind of business where goods are sold throughout the country not directly by owner but through agents on the basis of commission. The owner of the business is known as a Consignor and the person who sells goods on behalf of the Consignor is known as Consignee.
It is a special kind of business where goods are sent (dispatch) to various agents appointed at different places and who like to sell goods on behalf of master as per direction and instruction of master only on basis commision on sales.
Parties Involved In Consignment
In Consignment Business 2 parties are involved: Consignor & Consignee
Who Is Consignor?
The person who sells goods to his agent on behalf of him is known as a consignor. Consignor is the real owner of a business who takes profit and also bears the losses of the business.
Who Is Consignee?
The Person to whom goods are sent by business to be sold to others on commission basis is known as Consignee or Agent.
Features or Characteristic Of Consignment Business
For the sake of clarification some of the most important features or characteristic of consignment business are pointed below:
- Consignment Business is governed by laws at the agency of Indian Contract Act 1872.
- The relationship between consignor and consignee is like a relationship between master and servant or principal & agent.
- The agent who acts on behalf of business is known as Consignee.
- The real owner of the business is Consignor.
- The agent who acts on behalf of business is known as Consignee.
- The agent must act as per instruction of the principal.
- Agent appointed on the basis of payment of commision on sales made by him.
- The goods which are sent to Consignee is known as Outward Consignment for Consignor.
- The goods which are received by Consignee is known as Inward Consignment for Consignee.
- Consignee is required to take care of goods received by him.
- All the expenses on consignment will be banned by Consignor only.
- Any expenses made by the agent will be reimbursed by the Consignor.
- Consignee not required to pay any amount for goods received.
