The consignee acts in effect as a sale agent for the consignor in selling the goods. The consignor continues to own the consigned goods. This Insight will explain some of the basics of these commercial law rules by responding to a number of questions that, while perhaps not frequently asked, should be asked by consignors.Ī consignment is at common law a bailment of goods by a supplier (the consignor) to a merchant (the consignee) for sale. In bankruptcy cases such as those of The Sports Authority and hhGregg, consignors have clashed in litigation with inventory lenders of consignees and bankruptcy debtors on issues that, with proper planning, could have been avoided. The use of consignments by suppliers to retail merchants is more common than is widely thought. With the rise of retail store bankruptcies, it has become clear that many suppliers that consign goods to retail merchants are not fully knowledgeable of the commercial law rules governing consignments, especially those under the Uniform Commercial Code ( UCC), or the risks of not complying with those rules. Disputes like these can be avoided if consignors consider the basics of commercial law rules governing consignments, particularly under the Uniform Commercial Code, and take steps to protect their rights and interests. Disputes among consignors, inventory lenders, and bankruptcy debtors have been arising frequently in retail bankruptcy cases. In retail bankruptcies, it is important for suppliers consigning goods to merchants to be aware of the commercial law rules governing consignments.
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