Sale or Return of Goods Agreements
In transactions where goods are supplied for resale, particularly where new products and / or new markets are concerned, it may be desirable to have the option whereby unsold products can be returned to the supplier at no loss to the reseller.
Sale or Return Agreements provide for just such a transaction. In such cases, the title to the goods in question is transferred to the reseller, but subject to a contractual right to return those goods in return for a full refund within a prescribed period.
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Frequently Asked Questions
I want to place stock with a retailer but let them return what they do not sell. What agreement is that?
That is a sale or return arrangement. You supply goods to the reseller who can return anything unsold within an agreed period, so they are not left carrying stock that does not move. It is a common way to launch new products or enter a new market where the retailer is cautious about committing. The sale or return agreements in this sub-folder set out the return period, refunds and who bears risk while the goods are with the reseller.
When does ownership of goods pass under a sale or return arrangement?
It depends on what your contract says, and if it is silent the Sale of Goods Act 1979 fills the gap. Under section 18 rule 4, ownership passes to the reseller when they signal approval or do something that adopts the sale, or if they keep the goods beyond any fixed return date or, where none is fixed, beyond a reasonable time. A clear written agreement is far better than relying on that default, so the return period and the point of transfer are beyond doubt.
How long should I give a reseller to return unsold goods?
There is no fixed legal period, so you set it in the agreement to suit the product and selling season. Fixing a clear return window matters, because if you leave it open the Sale of Goods Act 1979 treats ownership as passing after a reasonable time, which is uncertain and can be disputed. Choose a period long enough to give the goods a fair chance to sell but short enough to get unsold stock back while it still has value.