Consignment businesses offer home goods, food, clothing, furniture and antiques brought to the store for resale by the owners or by people who make a living reselling second-hand items. The consignment store owner accepts a fee from the seller based on a contracted commission scale when the item sells. Even though consignment stores offer an alternative selling arrangement, regulations and laws restricting sales of some items apply equally to both traditional retail and consignment stores.
Stores must sign an agreement with the seller to accept an item for sale. The contract must meet specific state standards and include the conditions for the sale, including determination of the price, manner of display, fees assessed for the sale and the method of assessment and return of the item, should a store close or the item fail to sell. Both the store owner and consigner sign the contract to finalize the terms for the representation. Failure to sign a written contract creates a verbal contract, an agreement not recognized as a binding agreement in some states.
Consignment stores offering guns, knives and other weapons must meet state, county and local regulations restricting the sale. Some states, including California, outlaw the sale of assault weapons, automatic machine guns and martial arts weapons. Other states, including Wisconsin, require a waiting period for gun buyers, or require a license to take the gun from the store. New Jersey bans sale of stun guns and New York bans marketing realistic-looking toy guns. Consignments stores must meet the requirements for bans, waiting periods and licensing.
Counterfeits and Fakes
Establishments knowingly offering counterfeit goods for sale risk the same fines and penalties as the person consigning the item. CNBC notes counterfeit goods account for "hundreds of billions of dollars in sales" every year. Fake sport shoes, perfumes, designer purses and sunglasses sold in the consignment store open the owner to legal action, as well the risk of law enforcement impounding other store goods.
Alcohol, Drugs and Pharmaceuticals
Consignment stores without a state license to sell liquor or a pharmaceutical license cannot consign these items for sale in the store. Both categories of goods require a special license issued by the state to offer these items. Failure to observe the laws means risk of fines and retraction of a state-issued business license. Pharmaceutical companies also look at sales at consignment stores to sue owners knowingly offering counterfeit drugs brought to the store by consigners. Illegal and consigner-made designer drugs offered for sale by the cosigners also risk legal penalties for the store owner when put on store shelves.
Specific State Laws
Store operators must study individual state laws to determine the appropriate days for selling certain items in their inventory. State, county, and even local laws, limit sales of certain goods on weekends. Indiana, for instance, outlaws car sales on Sunday. Violation of the law opens the seller to Class B misdemeanor charges for auto sales on Sunday in the Hoosier State. Consignment stores cannot sell alcohol on Sunday — even when the store holds a liquor or alcohol spirits license — in many localities, including Indiana and some counties in Ohio and Minnesota.
- "Courier-Post"; Police - Illegal Weapons Sold at South Jersey Flea Market; Deborah M. Marko; June 2011
- Lawyers.com: New York Targets Illegal Sales of Toy Guns
- TheIndyChannel.com; Lawmaker Drives Sunday Car Sales Push; January 2011
- MinnPost.com; Sunday Liquor Sales - Who is Fighting Them and Why? Jeff Severns Guntzel; March 2011
Lee Grayson has worked as a freelance writer since 2000. Her articles have appeared in publications for Oxford and Harvard University presses and research publishers, including Facts On File and ABC-CLIO. Grayson holds certificates from the University of California campuses at Irvine and San Diego.