Consignment refers to an arrangement whereby goods are placed in
the hands of a party that will retain possession of the goods until
they are sold. The party in possession of the goods acts as an
agent for the supplier and is paid to sell them, but at all times
title to the goods remains with the supplier until they are
sold.
As with express trusts, the onus of establishing a consignment
arrangement rests with the supplier. If an unpaid supplier can
demonstrate that a consignment of goods exists, it will be entitled
to possession of any goods that can be identified, proceeds from
any of those goods sold by the trustee, or the amounts owing by
customers of the consignee on credit. An unpaid supplier will also
be able to claim proceeds of the sale of consigned goods if the
proceeds have been used by the bankrupt, provided they can be
traced to some identifiable, recoverable form.
