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What Is a Consignor?

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  • Written By: Dale Marshall
  • Edited By: Kristen Osborne
  • Last Modified Date: 14 October 2014
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The meaning of “consignor” has changed over the years. Originally a term used in shipping and defined under admiralty law, a consignor was the party that originated a shipment &emdash; that is, delivered it, usually to a ship, for transportation to another location. The receiver of the goods in the remote location was the consignee. Today, these parties would be a shipper and a receiver, although the original terms can still be found in some formal contracts of carriage.

The need for the distinction is clear. In a face-to-face sale, there's no appreciable time lag between ownerships. That is, as soon as payment is rendered, the seller hands over the goods to the buyer, who then takes possession. With a long-distance sale, though, especially under pre-industrial circumstances, the sale of goods over long distances was a significant component of the economy. Yet there was a significant period of time between the moment the goods left the possession of the seller and came into the possession of the buyer, time during which anything could happen. The consignor would deliver goods to a carrier, who would transport them to a distant location for delivery to the consignee, who would usually pay the shipper for the goods, and the shipper would then effect payment to the consignor.

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Every shipment of goods, then, was accompanied by a legal agreement identifying them and the parties, the parties' relationship to each other and to the goods, and the terms and conditions of payment. Consignors usually kept the title to the goods until delivered to consignees, and would arrange for insurance coverage in the event the goods didn't reach their destination as expected.

There's still a time lag between delivering goods to a carrier and their being delivered to the consignee, making it necessary to maintain the distinction among the parties. Unlike the days when trans-Atlantic communication took as long as trans-Atlantic transportation, however, payment upon receipt can usually be effected instantaneously through the use of letters of credit.

In contemporary times, especially in the United States, a consignor is a person who delivers goods &emdash; usually second-hand &emdash; over to another party to sell, usually at a significant discount off their original retail price. The consignor is paid only after the sale is made, at an agreed-upon percentage of the sale price or a flat amount. The goods are usually permitted to remain on display without cost for three to six months, following which time the consignor must remove them or title transfers to the seller. The commercial environment within which this is done is usually called a consignment shop, and the arrangement itself is commonly called a consignment sale.

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