Consignment Agreement Template For Fashion Boutiques

Can I hand my stock to a boutique on consignment without losing control of it? Yes, you can - but you need clear terms before the garments, accessories or samples leave your studio.

Consignment can be a great way to get your label into retail stores without the boutique buying stock upfront. The boutique displays and sells your products, takes an agreed commission, then pays you the balance after sales are made.

The tricky part is that fashion stock moves quickly. Sizes sell unevenly, markdowns happen, pieces get tried on, and returns can land weeks later. A well drafted consignment agreement keeps everyone clear on who owns the stock, who wears the risk, and when you get paid.

Do You Need A Written Consignment Agreement For A Fashion Boutique?

Yes, you should have a written consignment agreement before you give stock to a boutique. Without one, you may struggle to prove what was agreed if stock is damaged, discounted, returned late or not paid for.

A fashion consignment contract is different from a normal wholesale agreement or product supply arrangement. In a wholesale sale, the boutique usually buys stock from you and then resells it. In a consignment arrangement, you usually keep ownership of the stock until it sells to a customer.

Your agreement should spell out the commercial deal in a way both sides can actually follow. For example:

• which styles, sizes, colours and quantities are being provided
• whether the boutique can sell online, in store, at events or through social media
• the retail price and who can approve any markdowns
• the boutique's commission or fee
• when sales reports and payments are due
• what happens to unsold, damaged or stolen stock

This is especially important in fashion because your stock may be seasonal. If your summer linen pieces are returned in late April, they may be much harder to sell elsewhere. Your contract should deal with timing, not just ownership.

If you're using a retail consignment agreement template, treat it as a starting point rather than a finished document. Templates often miss brand-specific details like size curves, product care, sample handling, approval for discounts and whether stock can be photographed for the boutique's marketing.

Who Owns The Stock While It Is On Consignment?

Usually, you keep title to the stock until it's sold to a customer, but your agreement needs to say this clearly. If it doesn't, you can end up arguing about whether the boutique bought the goods outright or was only holding them for sale.

Your title clause should say that ownership stays with you until the boutique has sold the item and received payment from the customer, or until another agreed trigger happens. It should also make clear that the boutique is holding the stock on your behalf and can't treat it as its own inventory.

For example, your clause might cover:

• title remains with your business until sale
• the boutique must keep your stock identifiable, where practical
• the boutique can't pledge, charge or use your stock as security
• the boutique can't move the stock to another location without permission
• unsold stock must be returned when the consignment period ends

There's another legal layer to think about. Under the Personal Property Securities Act 2009, some commercial consignments can be treated like security interests. If that applies, you may need to register your interest on the Personal Property Securities Register to better protect your position if the boutique becomes insolvent or another secured creditor claims the stock.

This doesn't mean every small consignment arrangement needs the same PPSR approach. It depends on the structure, the parties and how the stock is supplied. If the stock is valuable or you're supplying multiple boutiques under an ongoing supply agreement, it's worth getting advice on whether PPSR registration should be part of your process.

Who Is Responsible If Stock Is Lost, Stolen Or Damaged?

Your agreement should make the boutique responsible for stock once it receives it, unless you agree otherwise. This is one of the most common areas of disagreement in boutique supplier consignment terms.

Fashion stock is handled a lot. Customers try items on, staff steam garments, hangers pull fabric, and jewellery or accessories can go missing. If your agreement simply says stock is on consignment but doesn't deal with risk, you may be left chasing payment for damaged stock with no clear rule to rely on.

Your loss and damage clauses should cover:

• when responsibility transfers, such as on delivery or when the boutique signs a stock receipt
• whether the boutique must pay you for stock that's lost, stolen or damaged while in its care
• how damaged stock will be valued, such as wholesale cost, agreed consignment price or retail price less commission
• whether normal customer try-on wear is treated differently from actual damage
• whether the boutique must have insurance for theft, fire, water damage and public liability
• what records and photos are needed if stock arrives damaged or is damaged in store

A Practical Example

Say Mia runs a Melbourne womenswear label and gives a boutique 20 dresses on consignment. Each dress has an agreed retail price of $220 including GST, and the boutique takes a 40% commission on sold items.

During the month, 8 dresses sell. Two more are damaged by makeup during try-ons and can't be sold at full price. If the agreement says the boutique must pay for damaged stock at the same amount Mia would have received on a sale, the calculation is clearer.

For each damaged dress, Mia's share would be 60% of $220, which is $132 including GST. For 2 damaged dresses, the boutique owes Mia $264 including GST, unless the agreement says a different damage value applies.

That kind of detail can feel a bit fussy when the relationship is friendly. But if something goes wrong, it helps both sides resolve it without turning the issue into a bigger dispute.

How Should Commissions, Markdowns And GST Work?

Commissions, markdowns and GST should be set out in dollars, percentages and timing rules. The clearer the money terms are, the easier it is to reconcile sales at the end of each month.

Like any commission agreement, the boutique's commission might be a percentage of the retail sale price, a fixed amount per item, or another model you agree. For fashion, percentage commissions are common because prices vary across garments and accessories.

Your agreement should answer these questions:

• Is the commission calculated on the GST-inclusive or GST-exclusive sale price?
• Does the boutique deduct its commission before paying you, or do you invoice for your share?
• Can the boutique discount stock without your written approval?
• Who absorbs the discount if an item is marked down?
• What happens if a customer uses a storewide discount code or loyalty credit?
• Are card fees, shipping fees or platform fees deducted before commission is calculated?

GST also needs careful handling. If your business is registered for GST, your prices, invoices and reports should be consistent. In Australia, GST is generally 10% on taxable supplies. Businesses usually need to register for GST once their GST turnover is $75,000 or more, although your own position can depend on your circumstances.

For example, if a jacket sells for $330 including GST and the boutique's commission is 35% of the GST-inclusive retail price, the boutique's commission is $115.50 and your share is $214.50. The agreement should say whether those figures are GST-inclusive and what tax invoice or recipient-created tax invoice process will be used.

Don't leave markdowns to assumptions. If you only want discounts with your written approval, say so. If you allow an end-of-season markdown after 60 days, set the maximum discount and whether it affects the boutique's commission.

What Should Your Reporting And Payment Terms Say?

Your reporting and payment terms should say exactly when the boutique reports sales and when you get paid. A friendly monthly text message isn't enough once you have multiple SKUs, sizes and returns moving through the store.

A practical reporting clause should require the boutique to give you a sales report at a set interval, such as weekly, fortnightly or monthly. Monthly reporting is common, but the right cadence depends on how quickly your stock sells and how much cash flow matters to your business.

Your report should include:

• style name or SKU
• size, colour and quantity sold
• sale date
• retail price actually charged
• discounts applied
• GST treatment
• boutique commission
• amount payable to you
• returns, exchanges and damaged items
• closing stock on hand

Your payment clause should then connect to the report. For example, the boutique might have to pay you within 7 days after the end of each calendar month, based on all sales made during that month, less approved returns and the agreed commission.

You should also decide what happens if a customer returns an item. Under the Australian Consumer Law, customers may have rights if goods are faulty, not as described or not fit for purpose. Your agreement should say how the boutique handles customer claims, who communicates with the customer, and whether a valid refund reduces the next payment to you.

If the boutique offers change-of-mind returns as part of its own store policy, decide whether that's allowed for your consigned stock. You may want approval rights, especially for delicate garments, jewellery, swimwear or made-to-order pieces.

What Should A Consignment Agreement Template Include?

A consignment agreement template should include the commercial terms, the stock handling rules and the exit process. It should be tailored before you use it, because the right terms for a luxury boutique aren't always right for a market stall, concept store or online retailer.

Here is a practical fill-in outline you can use to brief your lawyer or review a draft:

1. Parties: write the legal names, ABNs and contact details for your business and the boutique.
2. Consigned stock: attach a stock list with SKUs, descriptions, sizes, colours, quantities and agreed prices.
3. Sales channels: state whether sales can happen in store, online, through social media, at pop-ups or at events.
4. Title to stock: say that ownership stays with you until each item is sold or another agreed trigger occurs.
5. Risk, care and insurance: set out who is responsible for loss, theft, damage, storage, handling and insurance.
6. Pricing and markdowns: list retail prices, approval rules for discounts and any end-of-season markdown process.
7. Commission: state the percentage or fee, whether it is GST-inclusive, and what costs can be deducted.
8. GST and invoicing: explain the invoice process, tax invoice requirements and how GST will be shown in reports.
9. Reporting: require regular sales and stock reports with enough detail to reconcile payments.
10. Payment timing: set payment dates, payment method and what happens if payment is late.
11. Returns and customer issues: deal with Australian Consumer Law claims, store policies, exchanges and refunds.
12. Brand and marketing: say how your trade marks, logos, photos and product descriptions can be used.
13. Unsold stock: set the consignment period, return process, stocktake requirements and freight responsibility.
14. Termination: explain how either side can end the arrangement and what must happen to stock and money owing.
15. Dispute process: include a practical process for raising issues, reconciling records and resolving disagreements.

If you own a registered trade mark through IP Australia, or you're building a recognisable label, pay close attention to the brand and marketing clause. The boutique may need permission to use your product photos and logo, but you may want control over how your brand appears on its website, Instagram or sale signage.

You should also keep your stock list as a live record. Each delivery should have a delivery note or receipt signed by the boutique, and each return should be checked against that list. This simple admin step can prevent a lot of confusion later.

What Happens If The Boutique Does Not Pay Or Return Stock?

If the boutique doesn't pay or return stock, start by gathering records and asking for a written reconciliation. A calm paper trail usually gives you the best chance of fixing the issue quickly.

Work through this order:

1. Check your agreement: confirm the payment date, reporting date, return obligations and any notice process.
2. Collect your records: gather delivery notes, stock lists, emails, invoices, sales reports, photos and messages.
3. Ask for a stocktake: request a dated list of sold, unsold, damaged and returned items.
4. Send a written request: set out the amount owing or stock to be returned, with a clear deadline for response.
5. Pause further supply: avoid sending more stock until reporting and payment are back under control.
6. Get tailored help: if the amount is significant, stock is missing, or the boutique is in financial trouble, get advice early.

Your next steps will depend on the contract, the value of the stock and the relationship. Sometimes the issue is an admin backlog. Other times, the boutique may have sold stock but used the cash for other expenses.

If there's a risk the boutique is insolvent, your title clause and any PPSR position can become very important. This is where getting your documents right early can make a real difference, especially if you supply high-value garments, jewellery, handbags or seasonal collections.

Also remember your customer-facing obligations. If the boutique is selling to consumers, the Australian Consumer Law still matters. Your agreement should make sure complaints and faulty product claims are handled consistently, so customers aren't bounced between you and the boutique.

Key Takeaways

• A written consignment agreement helps you keep control of your stock while giving a boutique permission to sell it.
• Your title clause should clearly say when ownership passes, and you may need PPSR advice for higher-value or ongoing arrangements.
• Loss, theft, damage, markdowns and returns should be dealt with in detail, not left to assumptions.
• Commission and GST terms should explain how sales are calculated, reported, invoiced and paid.
• A template can help you organise the deal, but it should be tailored to your stock, sales channels and brand.
• Keep signed delivery records and regular stock reports so you can reconcile what has sold, what is still in store and what you're owed.

If you'd like help with your consignment agreement, boutique supplier terms, stock ownership clauses or retail payment and reporting process, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.