Consignment and sale are often used interchangeably which is a wrong approach because there are many differences between consignment and sale. Let’s look at some of those differences –
- While a person who sends consignment is called consignor or principal, while a person to whom consignment is sent is called consignee and person who sells goods is called seller, while person who buys goods is called buyer.
- In sale the goods as well as risk associated with those goods is transferred to buyer from seller as soon as sale happens while in case of consignment the ownership of goods as well as risk related to such goods does not gets transferred to consignee.
- In case of sale buyer cannot refund the goods unless they are defective (for that too there need to be solid reason) while in case of consignment consignee can refund the goods quite easily as the ownership has not passed to him or her.
- In case of sale the buyer can do whatever he or she wants with those products like reselling them for profit or consuming himself or herself while in case of consignment the consignee has to obey the orders of consignor.
- While sale is done for profit and hence it is suitable for manufacturing companies whereas consignment is usually done on commission basis and hence it is suitable for companies which are into trading.