Blog

Deposit of goods on consignment: does it constitute a deposit?

28/02/2019
Deposit of goods on consignment: does it constitute a deposit?
Photo: fongbeerredhot/Shutterstock.com

In a judgment of 26 November 2018, the Court of Appeal of Ghent (case 2016/AR/759) ruled that the deposit of goods on consignment does not constitute a deposit but does constitute a contract of sale subject to (the fulfilment of) a suspensive condition.

This judgment is noteworthy as the court declared in clear terms on the nature of a "consignment sale", which is something that courts and tribunals had previously often failed to do and so had led to some confusion about the nature and the consequences of a consignment sale.

The dispute

The dispute between the parties concerned the question of whether or not a sales agreement had been concluded between them.

The owner of a classic car, seeking to sell that vehicle, had used the services of a specialised classic car seller. The owner handed over the classic car for a consignment sale. The parties had also agreed on the final price to be paid to the seller, after resale.

The decision

The court ruled that the seller gave the vehicle on consignment to the buyer for resale of the vehicle to a third-party buyer.

The giving of goods on consignment is a commercial practice that is often confused with a deposit.

Consignment – sale

A consignment is a contract of sale, which is concluded between the consignor and the consignee under the suspensive condition that the latter sells the consigned good and so the contract – and the transfer of ownership - would then take full effect when the goods are sold to a third-party party. As long as the suspensive conditions are not fulfilled, the contract does not take effect. As a consequence, the risk of loss due to force majeure remains with the consignor, unless otherwise agreed.

The third-party buyer will pay the agreed price to the consignee, who will in turn pay the agreed price to the consignor.

Deposit

The difference with a deposit is essential: it is not a matter of storing the goods, but of selling them.

A deposit in general is an act of accepting the good(s) of another person, with an obligation to preserve it(them) and return it(them) in kind (under Article 1915 of the Belgian Civil Code).

Contact


This is a required field.
follow us on