1) Goods are forwarded by the consignor to the consignee with an objective of sale at a profit.
2) Under the consignment, goods are to be treated as the property of the consignor and to be sold at his risk entirely. The consignee does not buy the goods, he merely undertakes to sell them on behalf of the consignor. He is not responsible for any loss or even for any destructions or damages to the goods. But the consignee should not show any negligence.
3) The consignor does not sell the goods to the consignee. Therefore, he cannot ask the consignee to pay the price of the goods unless they are sold and the sale proceeds are actually realised.
4) The consignee agrees to sell the goods for an agreed rate of commission and is allowed to deduct his commission due from the sale proceeds.
5) The agent enters into the picture only when he sells the goods and realises the amount. He becomes indebted for amounts realised on behalf of the principal. The relationship between the consignor and the consignee is that of a principal and an agent.
6) As it is not a sale, whatever the consignee does is on behalf of the consignor and, therefore, all legitimate expenses incurred by the consignee for receiving and selling the goods should be reimbursed.
7) Any stock remaining unsold with the consignee belongs to the consignor.
8) As the consignee acts on behalf of the consignor, the profit or loss on sale of goods sent on consignment belongs to the consignor.
