Question

Which of the following statements is CORRECT in respect of goods sent to consignee?

• A. Consignor and consignee enter into an agreement for sale of goods
• B. The relationship between consignor and consignee is that of a trader and a customer
• C. The relationship between consignor and consignee is not that of principal and an agent
• D. Consignee is entitled to return the goods if remaining unsold

Answer 1

Answer: (D)

Consignee is entitled to return the goods if remaining unsold

• The goods sent on consignment inititates the consignment sale setup. The consignor and the consignment may not necessarily enter into an agreement for sale of goods. However, there may be some terms that may be discussed and specified in the proforma invoice issued by the consignor to the consignee while sending the goods on consignment.
• The consignee sells goods on consignment on behalf of the consignor, without actually buying them first from the consignor, or becoming the true owner of such goods. Thus, the relationship between the consignor and the consignee is that of the principal and agent and not the trader and customer.
• The relationship between consignor and consignee is that of principal and agent, as explained above.
• Consignee is entitled to return the goods if remaining unsold as the goods belong to the consignor. Only the possession had been passed to the consignee at the time of receiving the goods, the ownership of the goods still lies with the consignor and so, the goods should be returned to its righful owner.