Meaning
Contractual failures involving the unauthorized handling of third party property occur when a bailee uses or sells goods without following the agreed protocols. A breach of consignment typically involves a failure to remit payment after a sale or the improper storage of the inventory. Title to the goods remains with the consignor until the specific conditions for transfer are met.
Legal Trigger
Specific actions such as moving stock to an unapproved warehouse or mixing it with other assets constitute a violation of the trust relationship. When a breach of consignment is identified, the owner has the right to repossess the items immediately. This right often supersedes the claims of other creditors who may have a lien on the bailee assets.
Liability Recovery
Recovery of lost value includes the wholesale cost of the goods and any legal expenses incurred during the repossession process. Because a breach of consignment often happens when a retailer faces insolvency, the owner must act quickly to secure the physical stock. Financial damages are calculated based on the fair market value at the time of the violation.
Contractual Termination
Repeated failures to report inventory levels accurately provide the grounds for cancelling the distribution agreement.
