Distinction between Sale and Consignment

Although the possession of goods is transferred from one person to the other,

both in case of sale and in case of consignment, they differ from each other in

various ways. The difference between an outright sale and the goods sent on

consignment has been explained as follows:

 



Distinction Between Consignment and Sale

 

Basis of Difference

Consignment

Sale

Meaning

When goods are forwarded from the producer or manufacturers to middlemen for sale of such goods on the basis of commission, then it is called consignment.

When goods are sent by a seller to its buyer to receive the value of such goods then it is called a sale.

Ownership

In consignment, ownership is not transferred to the consignee. He works entirely on behalf of the consignor. He only possesses the goods.

In case of sale, the ownership of goods is transferred immediately to the buyer. 

Relationship

In the case of consignment, the consignor is the principal and the consignee is the agent. 

In case of sale the relationship between the buyer and the seller is that of a debtor and creditor.

Expense

In consignment, the consignee is not responsible for any liability. All expenses incurred during the entire process are borne by the consignor.

In sale, the buyer bears the expenses after delivery.

Order

In consignment, consignors can send goods to the consignee without any order received from the latter.

In sale, the seller sends the goods to the buyer only after getting an order from the latter.

Risk

In consignment, the risk involved in the goods sent remains with the consignor till the consignee sells the goods.

In case of sale, the risk of the goods sold is immediately transferred to the buyer.

Return of goods

In consignment, if the goods are not sold then the goods are returned to the consignor by the consignee.

In case of sale, the goods cannot be returned to the seller once sold. 

Account Sale

In case of consignment, an account of sale needs to be submitted periodically by the consignee to the consignor.

In case of sale, no such account of sale needs to be provided to the buyer by the seller. 

 

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