Consignment vs brokerage

Consignment: the car and the deal leave your hands

Under a consignment contract (komisjonileping), the consignee undertakes to conclude the transaction in their own name but for the account of the consignor — the car’s owner (VÕS § 692 (1)). To the buyer, the counterparty is the consignee, not you. You have no direct contractual relationship with the buyer.

The car passes into the consignee’s possession. They are liable for the loss of or damage to the consigned item in their possession (VÕS § 699 (1)) — but at the same time they acquire a statutory right of security over that very car, securing their own claims for fees, expenses and advances (VÕS § 702 (1)). Your car secures their claims against you.

They are not generally liable for the buyer’s performance: that liability (del credere) arises only by separate agreement, by usage, or where they fail to disclose the third party’s name to you (VÕS § 700 (1)). So they answer for keeping the car, but generally not for the buyer paying.

Brokerage: the deal stays yours

Under a brokerage contract (maaklerileping), the broker undertakes to mediate the conclusion of a contract, or to point out the opportunity to conclude one (VÕS § 658 (1)). The broker cannot become a party — the contract of sale is concluded between you and the buyer. You remain the seller.

The car does not pass into the broker’s possession, and that has a direct consequence: the right of security in § 702 (1) is the consignee’s right over a consigned item in their possession, so with a broker the question does not arise. A broker may accept payments on a third party’s behalf only with separate authorisation (VÕS § 659) — without it, the buyer pays you directly.

A broker is not generally liable for performance of the mediated contract (VÕS § 669 (1)); the exception is where they failed to disclose the name of a party (VÕS § 669 (2)). At the same time, brokers are specifically prohibited from recommending a counterparty whose proper performance there is reason to doubt (VÕS § 660) — vetting the buyer is a broker’s duty, not a courtesy.

When the fee becomes due

Here it is worth being straight about both models.

• Brokerage fee: the right to the fee arises once a contract has been concluded as a result of the broker’s mediation (VÕS § 664 (1)). The statute does not tie it to later performance — the exception is a contract concluded subject to a condition precedent (VÕS § 664 (4)). That provision favours the broker, not the seller.
• Consignment fee: the right generally arises once the third party has performed. But if the contract goes unperformed for reasons attributable to the consignor — that is, to you — the consignee keeps the right to the fee even though no sale took place (VÕS § 701 (2)).

Our contract settles this in your favour: our fee is tied to the sale price and falls due once the car is sold. No sale, no fee.

Reimbursement of expenses

The difference here is sharp. A broker may claim expenses only where this has been separately agreed (VÕS § 667 (1)) — and that holds even if no contract is concluded (VÕS § 667 (2)). Without an agreement, no expenses arise.

For consignment, the authorisation-contract rules apply (VÕS § 692 (2)): the consignor must reimburse reasonable expenses that the mandatary could consider necessary in the circumstances (VÕS § 628 (2)). No separate agreement is required — costs can arise in places you never negotiated line by line.

Both are species of the authorisation contract

The rules on authorisation contracts apply to both brokerage (VÕS § 658 (2)) and consignment (VÕS § 692 (2)) unless the special provisions say otherwise. In both cases the intermediary must act loyally and with due diligence (VÕS § 620 (1)). Where a consignee acts on a permanent basis, the rules on commercial agency apply in addition, for example as to payment of the fee (VÕS § 692 (3) and § 678).

What this means for you in practice

Setting the statute aside, the choice comes down to four questions:

• Whose name is on the buyer’s contract? Under consignment, the intermediary’s. Under brokerage, yours.
• Where does the money go? Under consignment it generally passes through the intermediary, who is a party in their own right (VÕS § 692 (1)); under brokerage the buyer pays you, absent separate authorisation (VÕS § 659).
• Who holds the car? Under consignment, the intermediary — together with a statutory right of security over that car (VÕS § 702 (1)). Under brokerage the car stays with you and you can keep using it.
• What costs can arise? With a broker, only those separately agreed (VÕS § 667 (1)); with a consignee, also reasonable expenses without any separate agreement (VÕS § 628 (2)).

Consignment has one clear advantage worth naming honestly: while the car is in the intermediary’s possession, they are liable for its loss or damage (VÕS § 699 (1)). But that protection is needed precisely because you handed the car over. Under brokerage the question never arises — the car is with you throughout, you set the price, you sign with the buyer, and the money comes to you.

Summary comparison