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A Consignment Agreement lets a business owner (consignor) place their goods with another party (consignee) to sell them without transferring ownership. Under Malaysian contract law, the consignee acts as an agent, selling items on behalf of the consignor while earning an agreed commission on each sale.

These agreements protect both parties by clearly stating payment terms, storage responsibilities, and sales conditions. Malaysian retailers often use them for high-value items like jewelry, art, or designer clothing, where the store displays and sells products without buying them outright. The agreement must comply with the Contracts Act 1950 and outline liability for damage or loss during consignment.

Consider using a Consignment Agreement when you want to sell products through another business without transferring ownership. This arrangement works especially well for Malaysian retailers testing new markets or manufacturers expanding their distribution reach without major upfront investments.

The agreement becomes crucial for high-value items like artwork, designer goods, or specialty equipment where outright purchase poses too much financial risk for retailers. It also helps new businesses enter competitive markets by reducing inventory costs. Malaysian law requires clear documentation of commission rates, handling procedures, and sales terms to protect both parties from disputes over damaged goods or unpaid commissions.

• Clothing Consignment Contract: Specialized for fashion retail, with specific terms for handling designer wear, seasonal items, and garment care. Includes detailed commission structures based on brand tiers and markdown schedules.
• Retail Store Agreement: Covers general merchandise with flexible terms for multiple product categories, including display requirements and inventory rotation policies.
• Art Gallery Consignment: Features specific provisions for valuable artwork, including insurance requirements, exhibition rights, and artist royalties.
• Auto Dealership Consignment: Tailored for vehicle sales with detailed documentation requirements, test drive policies, and maintenance responsibilities.

• Product Owners (Consignors): Manufacturers, artisans, or suppliers who want to sell their goods through established retail channels without losing ownership rights.
• Retail Stores (Consignees): Shops, boutiques, and galleries that display and sell consigned items while earning commission on sales.
• Legal Advisors: Corporate lawyers who draft and review Consignment Agreements to ensure compliance with Malaysian commercial laws.
• Business Managers: Retail operations staff who handle inventory tracking, sales reporting, and commission calculations.
• Insurance Providers: Companies offering coverage for consigned goods during storage and display periods.

• Basic Details: Gather complete business information for both consignor and consignee, including registration numbers and addresses.
• Product Information: List items with detailed descriptions, conditions, and agreed retail prices.
• Commission Structure: Define exact commission rates, payment schedules, and any performance targets.
• Duration Terms: Specify agreement length, renewal options, and notice periods for termination.
• Risk Management: Document insurance requirements, liability arrangements, and damage protocols.
• Operational Rules: Detail inventory tracking methods, sales reporting frequency, and handling procedures.

• Party Details: Full legal names, business registration numbers, and contact information of consignor and consignee.
• Goods Description: Detailed inventory list with pricing, condition notes, and unique identifiers.
• Commission Terms: Clear percentage rates, payment schedules, and calculation methods.
• Duration Clause: Agreement period, renewal terms, and termination conditions under Malaysian law.
• Risk Allocation: Insurance requirements, liability provisions, and loss handling procedures.
• Dispute Resolution: Malaysian jurisdiction clause, mediation procedures, and governing law statement.
• Execution Block: Signature spaces with witness requirements per Malaysian Contract Act 1950.

A Consignment Agreement differs significantly from an Agency Agreement in several key aspects, though both involve one party acting on behalf of another. While consignment specifically deals with product sales where ownership remains with the original party, an Agency Agreement covers a broader range of business activities and representations.

• Ownership Structure: In consignment, the consignor retains product ownership until sale, while agency relationships don't typically involve physical goods ownership.
• Scope of Authority: Agency Agreements grant broader powers to represent and act on behalf of the principal across various business matters, unlike the limited sales focus of consignment.
• Payment Model: Consignment deals specifically with sales commission on goods, while agency relationships may involve fixed fees, performance bonuses, or various compensation structures.
• Legal Obligations: Under Malaysian law, agents have fiduciary duties and can bind their principals in contracts, while consignees mainly handle sales transactions within preset terms.