A consignment agreement is an arrangement between two parties for the supply and sale of goods on a consignment basis. Under a consignment agreement, the supplier—usually referred to as the consignor—delivers goods to a third party—the consignee—who then sells them on behalf of the consignor. The consignee assumes responsibility for selling the goods and distributing them in their store. The consignor is compensated for these services with a percentage of the proceeds from each sale. Consignment agreements provide both parties with greater flexibility than traditional purchase orders, and they can be used in a variety of settings, from retail stores to artist galleries.