QUESTION 36. What is the meaning of consignment ? And what are the types of commission in consignment?
Answer 36. MEANING OF CONSIGNMENT : One person may send goods to another person (agent) for selling them on his behalf and risk. The person sending the goods is the owner of goods and the person to whom these goods are sent is this agent. Such goods are called Goods sent on consignment.
CONSIGNOR : In the above case sender of the goods , i.e , the owner of the goods is called the Consignor.
CONSIGNEE : The person to whom goods are sent for sale , is called the consignee. Consignee is the person who sells the goods on behalf and risk of another person who is the consignor . He gets some commission for doing this job.
TYPES OF COMMISSION IN CONSIGNMENT :
COMMISSION : Consignor pays commission to the consignee for selling his goods as per the agreement between them.
DEL-CREDERE COMMISSION : When consignee takes the responsibility of realising the amount from debtors in case of credit sales made by him , he is paid a special commission which is called 'Del-credere commission ' . In this case consignee bears the loss caused by bad debts . This commission is an additional commission over and above the ordinary commission allowed for selling goods.
OVER-RIDING COMMISSION : When consignor wants that this goods should be sold by consignee at a higher price than one which is prescribed by him , then he pays an additional commission for this purpose to the consignee , this additional commission is called over-riding commission . Sometimes this commission is given for popularising the goods also. There are no statutory provisions in connection with this commission. It depends purely on the agreement which is entered between the consignor and consignee.