A consignee is an individual or organization who is specified as the receiver of goods sent from a consigner – the individual or organization that sends the goods. The consignee receives, checks, and signs for the goods, after which the consignee is responsible for the care and transport of the goods.
When Does a Consignee Come into Play?
The consignee is a party to a sales/purchase contract with the consigner, and the goods sent are intended for sale at the consignee’s establishment. This type of contract is often used in wholesale goods distribution, retail chains, and manufacturing businesses. For example, a manufacturer may contract a retailer to purchase a certain amount of products, where the retailer is the consignee and the manufacturer is the consigner.
Rights and Responsibilities of the Consignee
A consignee is required to receive and sign for the goods from the consigner. They have the right to inspect the goods and may reject them if the goods do not meet agreed upon criteria. The consignee is responsible for selling the goods and paying the consigner for the goods as agreed upon in the contract. The consigner may receive monthly or quarterly payments from the consignee, or may be paid after the sale of the goods.
Examples of Consignee Uses
Consignee arrangements are commonly used in freight transportation, or when goods are sent to a remote location. A retailer may hire a freight company to ship a large number of items to a distribution warehouse, where the retailer is the consignee. Or in a business-to-business scenario, a manufacturer may contract a distributor to sell their products to retail stores, where the distributor is the consignee and is responsible for the handling, transport, and sale of the goods.