Is car consignment safe?

What legally happens in a consignment sale

Under a consignment contract the consignee undertakes to conclude the transaction in their own name but on the account of the consignor — the car’s owner (VÕS § 692 (1)). To the buyer, the counterparty is the consignee, not you. No direct contractual relationship arises between you and the buyer.

The car passes into the consignee’s possession and stays there until it sells. Everything else — both the protection and the risk — follows from those two facts: they are the contracting party, and your car is in their hands.

The three places risk actually arises

First, the money runs through the intermediary. Because the consignee is the buyer’s counterparty, the buyer pays them, and you acquire a monetary claim against the consignee. The claim is perfectly valid — but it is a claim against a company, and it deserves the same assessment you would give any company you trust with twenty thousand euros. Ask in writing how many days it takes for the money to reach you after the buyer has paid.

Second, the consignee acquires a statutory right of pledge over the car in their possession, securing their claims against you — fee, costs and advances (VÕS § 702 (1)). If a dispute arises over the size of the fee or the costs, it is not merely a dispute about an invoice: the subject of the dispute is outside your possession.

Third, a fee can arise without a sale. If the contract goes unperformed for a reason attributable to you, the consignee keeps the right to their fee (VÕS § 701 (2)). On top of that, the rules on mandate contracts apply (VÕS § 692 (2)), under which reasonable costs the mandatary could consider necessary must be reimbursed (VÕS § 628 (2)) — even where they were not separately agreed.

What protects you in a consignment sale

This deserves stating just as plainly. The consignee is liable for the loss of or damage to the consigned item in their possession (VÕS § 699 (1)). That is real protection: if something happens to the car while it is in their hands, the liability is theirs.

They must also act loyally and with the necessary diligence (VÕS § 620 (1)). And you can agree del credere liability, under which they answer for the buyer’s performance too — without such an agreement, a usage to that effect, or a failure to disclose the buyer’s name, that liability generally does not exist (VÕS § 700 (1)).

The logic to hold onto: the protection in § 699 (1) is needed precisely because you gave the car away. It exists and it works — but it solves a problem created by handing over possession.

What to check in the contract before signing

If these eight points are written into the contract and clear to you, a consignment sale is a well-managed transaction. Where one is left open is exactly where things go wrong later.

1. A handover record describing the car’s condition, with photographs, signed by both sides.
2. Who insures the car during the selling period and what the cover includes.
3. Whether the car will be driven — test drives, moving it — and who is liable if something happens then.
4. The lowest price at which a deal may be concluded, and who decides a price change.
5. The fee, whether it includes VAT, and which costs may be added.
6. How many working days the consignee has to transfer the money to you after the buyer pays.
7. The contract term and each side’s conditions for terminating it.
8. What happens if the car does not sell, or if you withdraw it before it sells.