In a consignment, the consignor, ships or transfers control of goods to a seller, the consignee, who agrees to market the property to buyers and pay over some portion of the sales proceeds to the consignor. The arrangement involves an intricate set of rights and obligations among the parties. There are also substantial and often overlooked risks, including that the consignee’s creditors may seek to claim a security interest in the consigned property. If these risks are not properly understood and remedies not carefully considered, the consignor is at risk of loss. This program will provide you to the law of consignments, UCC Article 9 issues and risks, and provide practical tips for drafting consignment agreements.
• Structure of common consignment transactions
• Parties, rights and obligations – consignor as creditor, consignee as debtor, creditors
• Risks of loss to consignor and how it can protect itself against consignee’s creditors
• Consignor remedies for consignee breach
• Law of consignments and relationship to secured finance
• Circumstances when UCC Article 9 does not apply to consignments
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