Consignment Agreement Template: Key Clauses and Risks for Australia

If you sell products through retailers, marketplaces, galleries, salons, op shops, or other businesses, consignment can be a smart way to grow without taking on all the costs (and risks) of running more locations yourself.

But while consignment can look simple on the surface - “you hold my stock and pay me when it sells” - it’s one of those arrangements where misunderstandings happen quickly if you don’t put the details in writing.

That’s where a consignment agreement template can help. A template gives you a starting structure, but it still needs to reflect how your products, payments, delivery methods and customer returns actually work in real life (and under Australian law).

Below, we’ll walk you through what a consignment agreement is, the key clauses to include, common risks to watch for, and how to adapt a consignment agreement template for your Australian business so it’s practical and enforceable.

What Is A Consignment Agreement (And When Do You Need One)?

A consignment agreement is a contract where one party (the consignor - usually the supplier/owner of the goods) provides goods to another party (the consignee - usually the retailer/seller) to sell on the consignor’s behalf.

The key point is this: in a typical consignment model, ownership of the goods stays with the consignor until the goods are sold. The consignee earns a commission or margin once a sale happens, then remits the balance to the consignor according to the agreement.

You’ll usually want a consignment agreement in place if you’re:

• placing stock with a retailer, boutique, studio or gallery to sell to customers
• working with a third-party seller who will manage the point-of-sale for your goods
• supplying goods to an event vendor or pop-up operator where you’ll be paid after sales
• trialling a new location without committing to a wholesale order

If you’re instead selling stock outright to a reseller (they pay you upfront, then they take the risk of selling it), that’s usually a wholesale/supply arrangement rather than consignment.

Consignment can be great, but it needs clear legal boundaries - especially around payment timing, returns, loss/damage, and what happens if the relationship ends.

Why A Consignment Agreement Template Isn’t “Set And Forget”

Using a consignment agreement template can save time and help you avoid missing key provisions. However, templates are still general documents - and consignment arrangements are often very specific to your business model.

In practice, small differences can completely change the risk profile. For example:

• Are you consigning high-value, one-of-a-kind goods (like art or jewellery), or low-cost high-volume products?
• Is the consignee allowed to discount your goods?
• Do you require minimum sales performance before you keep supplying stock?
• Who handles customer refunds, and who pays for them?
• What happens if the consignee becomes insolvent while holding your stock?

A strong template should be adapted to reflect:

• your commercial deal (how you actually operate)
• your risk tolerances (what you can afford to lose)
• Australian legal requirements (especially under the Australian Consumer Law)

It’s the difference between having “a document” and having an agreement that actually protects you when something goes wrong.

Key Clauses To Include In A Consignment Agreement Template

Below are the clauses we commonly see as essential in a consignment agreement. Depending on your industry, you may need additional sections, but these are the foundations.

1. Parties, Definitions And The Consignment Model

Start by clearly identifying the consignor and consignee (legal names, ABN/ACN, addresses). Then define the basics of the arrangement in plain English:

• the consignee will hold goods and sell them to customers
• the consignor retains title/ownership until sale
• the consignee must account for sales and remit proceeds

Defining the model matters because if the agreement is unclear, you can end up in disputes about whether it was a consignment, a sale-or-return arrangement, or a wholesale transaction.

2. Goods Covered: Stock Lists, Deliveries And Quality Control

Your template should include a mechanism for documenting what stock is provided. Usually this is handled via a schedule, delivery docket, inventory list, or periodic stocktake report.

At a minimum, include:

• a description of goods (SKU, barcode, size, colour, condition)
• how and when goods are delivered (and who pays shipping)
• when risk passes (more on this below)
• inspection process on delivery (timeframe to report damage/shortfalls)

If brand presentation matters (most consumer brands), consider adding quality and display standards - where goods can be displayed, how they must be stored, and whether the consignee can bundle them with other products.

3. Title, Risk And Responsibility For Loss Or Damage

This is one of the most important parts of any consignment agreement.

In consignment, it’s common that the consignor keeps title (ownership) until sale. But the agreement still needs to allocate risk clearly. For example:

• If stock is stolen from the premises, who bears the loss?
• If stock is damaged by staff or customers, who pays?
• If goods expire or degrade (e.g. cosmetics/food), who is responsible?

Many businesses assume “if I still own it, it’s my risk” - but commercially, you may decide the consignee should be responsible once they take possession, because they control storage and security.

A practical approach is to specify that title stays with you, but the consignee bears risk of loss/damage while the goods are in their possession (subject to defined exceptions).

4. Pricing, Discounts And Who Controls The Customer Offer

You’ll want the agreement to state:

• the retail price (or pricing rules)
• whether the consignee can discount (and within what limits)
• whether promotions require your approval
• how GST is treated in the sale price (if relevant)

GST treatment can affect how pricing and commission are calculated, but it’s also a tax/accounting issue - so it’s worth confirming the right approach for your circumstances with your accountant or tax adviser.

If pricing is a sensitive part of your brand, build in controls. If flexibility matters (e.g. seasonal clearance), define a process for discount approvals in writing.

5. Commission/Margin And Payment Terms

This clause should be unambiguous. Spell out:

• the consignee’s commission (percentage) or margin
• whether commission is calculated before/after GST
• when you get paid (e.g. weekly, fortnightly, monthly)
• how payment is made (bank transfer) and what reporting is required
• whether the consignee can deduct expenses (often a red flag unless tightly controlled)

You should also deal with late payments. Even if you don’t want to be heavy-handed, clear consequences (and interest, if appropriate) can prevent the “we’ll pay you soon” cycle.

If you’re relying on consistent cashflow, it’s also worth thinking about what triggers an immediate reconciliation - for example, termination, insolvency risk, or missing reports.

6. Reporting, Stocktakes And Audit Rights

Consignment lives and dies on record-keeping. Your agreement should set expectations such as:

• what sales reports must include (units sold, returns, discounts, date of sale)
• stocktake frequency (e.g. monthly or quarterly)
• your right to inspect records and inventory on reasonable notice
• how discrepancies are handled

This isn’t about distrust - it’s about having a workable system when you’re not physically present at the point of sale.

7. Customer Returns, Refunds And Australian Consumer Law (ACL)

This is where many templates fall short if they’re not drafted with Australia in mind.

If goods are sold to consumers in Australia, the Australian Consumer Law (ACL) can apply, including consumer guarantees and rules about misleading or deceptive conduct.

Your consignment agreement should allocate responsibilities for:

• handling customer complaints
• refunds, repairs or replacements where required by the ACL
• who bears the cost of returns (including shipping)
• how defective goods are dealt with

Importantly, you can’t “contract out” of ACL consumer guarantees. So rather than trying to disclaim everything, your agreement should set a clear internal process between you and the consignee for how ACL issues are managed.

It’s also wise to ensure your customer-facing statements (in-store signage, online listings, staff scripts) don’t accidentally create problems - particularly around warranties and refunds. (For example, a blanket “no refunds” policy can be unlawful in many situations.)

8. Marketing, Branding And Intellectual Property Use

Consignment often involves your brand being used in-store or online. Your agreement should cover:

• how the consignee can use your trade marks, logos and product images
• whether they can advertise online (and on which channels)
• whether they can create their own content featuring your products
• requirements to follow your brand guidelines (if you have them)

If you’re providing images, descriptions, or other content, this is also a good time to address who owns that content and what happens when the consignment arrangement ends.

9. Term, Termination And What Happens To Unsold Stock

A consignment agreement should clearly explain:

• the term (fixed term, ongoing month-to-month, or consignment-by-consignment)
• termination rights (for convenience and for breach)
• what happens to unsold goods (return process, costs, timing)
• what happens to sold-but-unpaid goods (final reconciliation)

Don’t forget practical questions like: who pays return shipping, what condition returned goods must be in, and what happens if goods aren’t returned on time.

If you’re the consignee (the party holding stock), you’ll want a clear process too - especially to avoid being stuck with abandoned stock or unclear return obligations.

10. Liability, Indemnities And Insurance

Consignment relationships are commercial relationships, so your agreement should address what happens when someone’s actions cause loss.

This usually includes:

• limitation of liability clauses (carefully drafted so they’re enforceable)
• indemnities (e.g. for third-party claims caused by one party’s negligence)
• insurance requirements (public liability, product liability, stock insurance)

Liability wording needs to be handled carefully. Overly broad exclusions can be unenforceable or create more confusion than protection, especially where consumer rights are involved.

Common Risks In Consignment Deals (And How A Good Template Helps)

Consignment is attractive because it can feel lower risk than other growth strategies - but legally and commercially, there are some predictable pain points.

Cashflow Risk: You Only Get Paid After Sales (And Sometimes Late)

If you’re consigning stock, you’re funding inventory without guaranteed payment timing. If the consignee is slow to report or pay, you may be left chasing money.

A good agreement helps by:

• setting strict reporting and payment timelines
• including reconciliation rights on termination
• making it clear what happens if payments are late

Stock Control Risk: Your Goods Are Off-Site

You may not know what’s selling, what’s missing, or what’s damaged until much later.

Your agreement can reduce this risk with stocktake obligations, inspection rights, and clear responsibility for loss/damage.

Brand Risk: Discounting, Display Standards And Customer Experience

Your brand can be affected by:

• unauthorised discounting
• poor presentation or storage
• inaccurate product claims made by staff

This is where pricing controls, marketing approvals, and clear customer-complaint processes make a real difference.

Insolvency Risk: What If The Consignee Goes Under?

This is a tough one. If the consignee becomes insolvent while holding your stock, you may need to prove you still own the goods and that they can be returned to you.

Having a well-drafted agreement (and strong inventory records) is critical. Depending on your circumstances, it may also be worth getting advice on whether a PPSR registration is appropriate - outcomes can vary depending on how the arrangement is structured (including whether it’s treated as a consignment, bailment or another type of arrangement under the Personal Property Securities framework).

How To Adapt A Consignment Agreement Template For Your Business

If you’re starting with a consignment agreement template, you’ll get the most value by treating it like a framework - then tailoring it to what’s actually happening in your business.

Step 1: Map Your Real-World Process (Before You Edit The Template)

Before changing clauses, write down how your consignment arrangement works in practice:

• How do you deliver stock and confirm receipt?
• How are sales recorded and reported to you?
• When do you expect to be paid?
• Who handles customer refunds?
• How do you want unsold goods returned?

When you’re clear on the workflow, it’s much easier to spot where a generic template doesn’t fit.

Step 2: Decide Where You Want The Risk To Sit

Many disputes come down to “who is responsible” for a loss or cost. Decide your position on:

• loss/damage while in the consignee’s possession
• chargebacks and refund costs
• discounting approvals
• marketing and brand use

Then make sure the agreement reflects that position clearly (and consistently across clauses).

Step 3: Align Your Customer-Facing Terms With The Consignment Deal

If you sell direct-to-consumer online as well as through consignees, check for inconsistencies between:

• what your website says about refunds and warranties
• what the consignee tells customers in-store
• what your consignment agreement says about returns and ACL responsibilities

Even if you’re not the one speaking to the customer at the point of sale, your brand may still be associated with the promises being made.

It can also be helpful to tighten your broader customer terms (where relevant), such as Terms of Sale, especially if you use a mix of sales channels.

Step 4: Make Sure Your Agreement Matches Your Business Structure

Your contract should be signed by the correct legal entity - sole trader, partnership, or company.

If you operate through a company and you’re growing, it’s worth checking that your internal governance documents are also in order (for example, a Company Constitution if you’ve set one up, and clear signing authority).

If you have co-founders or multiple owners, the consignment arrangement can also interact with how decisions are made internally - which is where a Shareholders Agreement can be useful for avoiding internal disputes about pricing strategy, risk tolerance, and credit terms.

Step 5: Don’t Forget Data And Marketing Compliance

Some consignment arrangements involve customer data sharing (for example, warranty registrations, mailing lists, or special orders). If personal information is collected or shared, you may need to consider privacy compliance and ensure your Privacy Policy reflects what you do.

If email marketing is part of the arrangement (for example, a joint promotion where emails are sent to customers), be mindful of Australian rules around marketing communications. Having a compliant approach to email marketing laws can prevent avoidable complaints and penalties.

What Other Legal Documents Might Support A Consignment Arrangement?

A consignment agreement is the core contract, but depending on how your business operates, you may also benefit from complementary documents.

• Service Agreement: If the consignee is doing more than just selling (for example, styling, repair, installation, or storage services), a separate Service Agreement can clarify scope, service standards and liability.
• Non-Disclosure Agreement (NDA): If you’re sharing supplier pricing, new product designs, or launch plans, a Non-Disclosure Agreement can help protect confidential business information.
• Website Terms: If you’re also selling online (or if the consignee is listing your goods online under your brand assets), clear website terms and customer purchase terms can reduce confusion across channels.

Not every business needs all of these, but it’s worth thinking about where your biggest risks sit - and then documenting those parts properly.

Key Takeaways

• A consignment agreement is different from wholesale: you typically keep ownership of the goods until they’re sold, and you’re paid after sales occur.
• A consignment agreement template is a good starting point, but it needs to be tailored to your actual workflow (delivery, reporting, payments, returns and end-of-term processes).
• Key clauses usually include stock lists, title and risk allocation, commission and payment terms, reporting/stocktakes, pricing controls, and termination/return of unsold goods.
• Australian Consumer Law (ACL) issues (refunds, repairs, replacements and customer complaints) should be handled carefully - you can’t simply contract out of consumer guarantees.
• Consignment risks often include cashflow delays, missing/damaged stock, brand control issues, and insolvency risk - a well-drafted agreement helps reduce uncertainty and disputes.
• Supporting documents like Terms of Sale, a Privacy Policy, or an NDA may also be relevant depending on how you sell and share information.

If you’d like help tailoring a consignment agreement for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.