# Understanding Consignment Agreements
## Overview of a Consignment Agreement
A consignment agreement is a contract between a consignee and a consignor, wherein the consignee sells goods on behalf of the consignor, who owns the goods. The unsold goods are returned to the consignor. The consignee may take goods for resale and pays the consignor based on the sale. The agreement outlines the terms for sale, payment, fees or commissions.
### Key Components
- Parties involved
- Goods to be sold
- Delivery terms
- Duration
- Payment and commission details
- Efforts to sell
- Title and ownership
- Return of unsold goods
### Benefits
- Additional exposure for brands and goods
- Targeting new markets without high investment
- Storage alternatives
- A written agreement reduces liability and protects both parties.
## Consignment Agreement Economics
### What percentage does a consignment agreement take?
The consignment percentage may vary based on the agreement between the consignee and consignor.
## Potential Drawbacks
### What is the disadvantage of consignment agreement?
If goods do not sell, they return to the consignor. This may present a disadvantage as the consignor assumes much of the risk.
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