The consignment stock system where goods are held by the customer or distributor is frequently used to facilitate sales.
Apparently, it is a sales and return contract where the supplier transfers goods to another party to be held by the latter in storage, while said goods continue to be owned by the assignor.
In fact, however, retention of title, even if set forth in writing in the contract, will be merely an illusion in the event of customer/distributor insolvency or bankruptcy, because the Spanish Bankruptcy Act includes within the insolvency estate any consignment stock held by the insolvent party.
It makes no difference whether the owner of the property has retained the right to give or not to give its consent for withdrawal by the customer/distributor.
The only protection provided by the Bankruptcy Act to creditors in this situation is the chance to receive payment from the final purchaser of the goods, provided the latter has not already paid for them. Otherwise, said debt will simply be included as unsecured credit, the collection of which, as we know, is highly unlikely.
In our opinion, protection of the value of goods assigned as consignment stock should be established in contractual clauses requiring the customer/distributor actually holding the goods to undertake certain obligations to protect the interests of the company that entrusts it with the management of said goods.
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