consignment contract

a sales agreement in which a seller (consignor) transfers possession but not ownership of an item to a consignment buyer (consignee) who will in turn sell the item to a third party. Ownership is transferred to the consignee at the time of the ultimate sale. Until the ultimate sale is made, the risk of loss remains with the original owner.

At the height of the pink-flamingo craze, Fergus contracted to sell ten lawn ornaments on consignment through a local specialty shop. Before the ornaments could be sold, the craze faded and the value of the plastic birds fell well below the asking price. The subsequent loss of profit fell on Fergus who in the end recovered only half of his initial investment. The specialty shop received its full commission according to the terms of the consignment contract.