Consignor, Consignee

The consignor, in a contract of carriage, is the person sending a shipment to be delivered whether by land, sea or air. Some carriers, such as national postal entities, use the term “sender” or “shipper” but in the event of a legal dispute the proper and technical term “consignor” will generally be used.

If Sender sends a widget to Receiver via a delivery service, Sender is the consignor and Receiver is the consignee.

In a contract of carriage, the consignee is the entity who is financially responsible (the buyer) for the receipt of a shipment. Generally, but not always, the consignee is the same as the receiver.

If a sender dispatches an item to a receiver via a delivery service, the sender is the consignor, the recipient is the consignee, and the deliverer is the carrier.

Consignor vs. Consignee

Now that the idea of consignment is clear, the matter of consignor vs. consignee can be discussed. A consignor is an individual or party that brings a good to be sold on their behalf by another party, which is called the consignee.

The consignee acts as a sort of middleman, which is the individual that buys or retains the goods and passes them along to a third party or the final buyer. Regardless of whether the item is being sold and purchased or simply transferred from one party to the other through the consignee, ownership remains in the hands of the consignor until the deal is finalized, either through payment by or delivery to the final buyer.

The consignor may also be referred to as the shipper, obtaining shipping or transfer documents for the goods they are selling to the consignee. The consignor keeps the title/ownership of the property until it is transferred to or sold to the final party.

Example of a Consignor/Consignee Relationship

To understand the consignor/consignee relationship better, consider the following example. A family is looking to sell its collection of valuable items. They make an arrangement with an auction house to sell the items. Here, the family is the consignor and the auction house is the consignee. The auction house markets the items, but the family retains ownership of them until a third party purchases the items.

Once payment’s been made from the third-party buyer to the auction house the money is turned over to the consignor, minus a fee for the consignee for hosting the items and facilitating the sale. Ownership is then transferred to the buyer.

Consignee

A consignee is the party identified on shipping documents as the recipient of goods to be delivered. This party is responsible for paying customs duties as the designated owner of the goods. The consignee does not formally take possession of the goods until it pays the consignor. The consignor is usually the party that shipped the goods.

The consignee is typically responsible for damage to the goods given into its care, even if ownership still resides with the consignor during the holding period.

An intermediate consignee is a party that receives a shipment on behalf of the ultimate consignee. The ultimate consignee is the intended final recipient of a delivery, which is forwarded to it by the intermediate consignee.

From an accounting perspective, the consignor retains ownership of consigned goods, so these inventory items remain on its balance sheet until such time as they are either sold by the consignee to a third party, or purchased outright by the consignee. The consignor does not record a sale transaction when goods are initially shipped to the consignee, since the consignor still owns the goods. A sale transaction for the consignor only occurs when goods are sold to a third party or bought outright by the consignee.

From the perspective of the consignee, goods received on consignment do not appear on its balance sheet, since it does not own the inventory. Instead, it records a commission on any sales to third parties.

Consignor

A consignor is the party who delivers goods that they own to another party to hold and sell them on their behalf. In other words, it’s the owner of a product who allows a store to take possession of it in order to sell it for him or her.