WHAT IS CONSIGNMENT
Consignment is a process where one person sends goods to his agent in a foreign country, that is in another country or abroad or in another locality within the country for sale on his behalf. The person sending the goods is called the consignor while the person receiving is called the consignee or agent. The goods are not on sale to the consignee or agent, he only holds them for sale on behalf of the consignor or principal, and may return them if not disposed off.
Thus, the agent is not obliged to pay for the goods until he has sold them and collected the proceeds. Hence the goods belong to the principal even though they are out of his disposal
REMUNERATION OF CONSIGNEE
The consignee is remunerated by the way of commission which is computed as a percentage on his sale. He is entitled to “del- credered” commission which is extra commission, if he guarantees the consignor against any bad debts arising from credit sales. In accepting this responsibility, he becomes liable to the consignor immediately the goods are sold.
PRO- FORMA INVOICE
This invoice is usually sent by the consignor along with the goods. It shows detailed information about the goods consigned such as quantity, shipping or carriage arrangements, cost price, insurance policy etc. it also gives the agent information about the minimum price the goods is expected to be sold.
