Consignor vs. Consignee: Meaning, Difference, Examples

When it comes to the world of business, there are a lot of important terms and concepts that one needs to be familiar with. Two of these are consignors and consignees. Though consignor and consignee may sound similar, they have very different meanings.

Both of them are a huge part of the business world, and it’s important to understand the distinction between them.

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Table of Contents

What is Consignment

To understand who a consignor and consignee are, it’s important to first understand the concept of consignment.

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Consignment is defined as a method of selling goods in which the seller agrees to sell goods on behalf of the owner, and only gets paid if and when the goods are sold. It is one of the most vastly used methods of selling goods all over the world, as it is considered to be a low-risk way of doing business.

Who is a Consignor

A consignor is a party or person who is sending out the goods on consignment, this could be an individual or a company. The consignor retains ownership of the goods until they are sold, at which point the title is transferred to the consignee.

The consignor also typically sets the selling price of the goods. In some cases, the consignee may have the opportunity to negotiate a higher price, but this is not always the case. In most situations, the consignor will receive a percentage of the sale, while the consignee will keep the rest.

Who is a Consignee

A consignee is a party or person who has agreed to sell the goods on behalf of the consignor. The consignee is typically a retailer, but this doesn’t always have to be the case.

The consignee is responsible for selling the goods and then transferring the ownership of the goods to the buyer. The consignee also keeps a portion of the proceeds from each sale, with the rest going back to the consignor.

This means that the consignee is essentially acting as a middleman between the consignor and the buyer.

Key Differences Between Consignors and Consignees

Here are some of the key differences between them:

The consignor is the owner of the goods, whereas the consignee is the person who receives the shipment on behalf of the consignor.
The contract of carriage is between the consignor and the carrier, whereas the contract of sale is between the consignor and the consignee.
The consignor is liable for the loss or damage of the goods during transit, whereas the consignee is only liable if he/she accepts the goods in damaged condition.
The consignor has the right to sue the carrier for any loss or damage to the goods, whereas the consignee can only sue the carrier if he/she is also the owner of the goods.

Conclusion

Both consignor and consignee are important parts of the shipment process. While the consignor is responsible for the goods until they are delivered to the consignee, the latter is responsible for receiving the shipment and taking ownership of the goods. Both have different legal rights and responsibilities, which are important to understand before entering into any contract.