by Key differences between Joint Venture and Consignment
| Basis of Comparison | Joint Venture | Consignment |
|---|---|---|
| Definition | Temporary business partnership | Goods sent to agent for sale |
| Parties Involved | Co-venturers | Consignor and Consignee |
| Ownership | Joint ownership by partners | Ownership remains with consignor |
| Objective | Profit sharing | Selling goods on behalf |
| Agreement | Formal or informal | Formal agreement |
| Risk Sharing | Shared by all partners | Borne by consignor |
| Profit Sharing | Shared as per agreement | Commission for consignee |
| Scope | Broad (business activity) | Narrow (selling specific goods) |
| Investment | Contributed by partners | Provided by consignor |
| Control | Joint control by partners | Control by consignor |
| Duration | Temporary (until completion) | Ongoing as per agreement |
| Accounting | Separate joint venture account | Consignment account maintained |
| Legal Entity | Not a separate legal entity | Not a separate legal entity |
| Risk of Loss | Shared by co-venturers | Borne by consignor |
| Termination | On completion of venture | As per agreement |
Joint Venture
Joint Venture is a business arrangement where two or more parties come together to undertake a specific project or business activity, sharing resources, risks, and profits. Unlike a partnership, a joint venture is usually formed for a temporary period or a single project, after which it may dissolve. Each party maintains its distinct identity while contributing assets, capital, and expertise to achieve mutual goals. Joint ventures are common in large-scale projects like infrastructure, technology development, and international business expansion, where collaboration enhances competitive advantage and market reach.
Consignment
Consignment is a business arrangement where a consignor (owner) sends goods to a consignee (agent) to be sold on their behalf. The consignor retains ownership of the goods until they are sold, while the consignee earns a commission for facilitating the sale. The consignee is responsible for marketing and selling the goods but does not bear the financial risk of unsold inventory. Once the goods are sold, the consignee remits the proceeds to the consignor, keeping a portion as agreed. This arrangement is common in retail and distribution businesses.
One thought on “Distinction between Joint Venture and Consignment”