JOINT VENTURE AND CONSIGNMENT

Even though both consignment and joint venture are in the nature of an agreement between different parties, there are many points of difference between the two. The main points of  difference are as follows:

 



Nature of Relationship

 

Joint Venture: It is a temporary partnership between two or more parties.

 

Consignment: It refers to a principal (seller) sending goods to his agent (buyer) for sale to third parties.

 

Parties

 

Joint Venture: The participants in a joint venture are called co-ventures.

 

Consignment: The parties to a consignment agreement are known as consignor and consignee.

 

Relationship

 

Joint Venture: The relationship between co-ventures is like that of partners in a partnership.

 

Consignment: The relationship between consignor and consignee is a principal-agent relation.

 

Profit Sharing

 

Joint Venture: Co-ventures share the profits and losses of the joint venture in their agreed proportion.

 

Consignment: The consignor and consignee do not share profits; the consignee receives a commission.

 

All Rights

 

Joint Venture: The co-ventures enjoy equal rights in a joint venture.

 

Consignment: The consignor and consignee do not enjoy equal rights. The consignor has the rights of a principal and the consignee those of an agent.

 

Governing Act

 

Joint Venture: The joint venture is governed either by the contract law in each U.S. state or the business organizations acts of each U.S. state.

 

Consignment: The relation between the consignor (seller) and the consignee (buyer) is governed by Law of Agency because it involves a principal – agent relation.

 

Powers

 

Joint Venture: Co-ventures have unlimited powers with respect to the joint venture.

 

Consignment: The consignee’s powers are limited. The consignee is the agent who follows instructions from the consignor.

 

Ownership

 

Joint Venture: The co-ventures are the co-owners of the joint venture.

 

Consignment: The consignor is the owner of the business activity – the goods.

 

Information Sharing

 

Joint Venture: The co-ventures share the required information on a regular basis.

 

Consignment:  The consignee prepares and shares an account of sales with the

consignor detailing the business activities carried on.

 

Maintenance of Accounts

 

Joint Venture: The co-ventures maintain the accounts as specified in the joint venture agreement.

 

Consignment: There is only one method of maintaining the accounts of the consignment.  

 

Basis of Accounting

 

Joint Venture: In joint venture cash basis of accounting is applied.

 

Consignment: Actual basis of accounting is applicable.

 

Continuity

 

Joint Venture: The joint venture terminates when the venture is completed.

 

Consignment: The consignment is continuous for as long as both the consignor and consignee agree.

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