You know that in consignment, the goods are sent by one person to another for sale by the latter on behalf of the former. Therefore, there are two parties involved:
(i) the person who sends the goods
(ii) the person to whom the goods are sent.
The person who sends the goods to the agent is called the ‘consignor’ and the person to whom the goods are sent for sale is called the ‘consignee’.
If ‘X’ sends goods to ‘Y’ for sale, ‘X’ is known as consignor and ‘Y’ consignee. The Consignor is the ‘principal’ and the consignee is the ‘agent’. Their mutual relations are governed by the Law of Agency and, of course, by the terms of the contract between themselves. The consignee is a special kind of agent who is in possession of the goods. He passes the title of the goods to those who buy from him even if he sells the goods in contravention to the principal’s instructions.
Suppose, the consignor instructs the consignee not to sell the goods below a certain price. If the consignee sells the goods below the stipulated price, the buyer will have good title to goods. The consignor may, of course, ask the consignee to pay damages for breaking the terms of the contract with him. Like all agents, the consignee must render true accounts to the consignor, be faithful to him, and act according to his instructions. He is entitled to remuneration and reimbursement of expenses incurred by him on behalf of the consignor.
