Commercial consignment

A ‘commercial consignment’ is a consignment that meets additional defined criteria under the PPS Act. It is deemed to be a security interest even if it doesn’t meet the standard PPS Act definition of a security interest.

A consignment is traditionally recognised as an arrangement where a person (the consignor) delivers their property to another person (the consignee) so they can sell that property on their behalf.  A consignment is considered to be a ‘commercial consignment’ if:

  1. the consignor still keeps an interest in the goods that they have delivered to the consignee; and
  2. they have delivered those goods for the purpose of sale, lease or other disposal; and
  3. the consignor and the consignee both deal in those types of goods in their ordinary course of business.

The two exceptions to this rule are consignments under which the goods are delivered to:

  1. an auctioneer for the purpose of sale; or
  2. a consignee, (for sale, lease or other disposal), if it is generally known to its creditors to be selling or leasing goods of others.

An interest of this type may be a PMSI. For more information, see the Purchase money security interests (PMSI) page