Citations Affected: IC 6-2.5; IC 24-4.
Synopsis: Retail consignment sales. Provides that if a person delivers
an item with a value of at least $50 to a retail merchant for exhibition
or sale on commission, the item is considered to be for sale on
consignment unless the person is paid in full upon delivery. Provides
that the item and the proceeds due the consignor from the sale of the
item are property held in trust for the consignor by the retail merchant
and are not subject to seizure or encumbrance by a creditor of the retail
merchant. Permits a retail merchant to accept an item for consignment
only if a written contract containing certain provisions is executed.
Specifically exempts items sold at auction from the non-tax provisions
of this act, and specifies that if a provision of this act conflicts with the
Uniform Commercial Code (UCC), the UCC controls. Requires a retail
merchant that is a consignee to collect and remit the state gross retail
tax on the gross retail income received in a consignment sale. Requires
the retail merchant to provide a consignor customer an invoice that
shows that the state gross retail tax was paid to the consignee retail
merchant with a clear notation on the invoice that the item was a
consignment sale by the retail merchant on behalf of the seller to the
Effective: July 1, 2009.
January 13, 2009, read first time and referred to Committee on Small Business and
January 22, 2009, reported _ Do Pass.
January 26, 2009, read second time, ordered engrossed. Engrossed.
January 27, 2009, read third time, passed. Yeas 97, nays 0.
A BILL FOR AN ACT to amend the Indiana Code concerning trade
the person with respect to an item described in subsection (a).
(c) An item described in subsection (a) is trust property and the retail merchant is trustee for the benefit of the person until the item is sold to a bona fide purchaser or returned to the person.
(d) Except as provided in subsection (e), this subsection does not apply to a deposit placed by a customer on an item. The proceeds of the sale of an item described in subsection (a) are trust property. The retail merchant is trustee for the benefit of the person until the amount due the person from the sale is paid in full. Unless the retail merchant and the person expressly agree otherwise in writing:
(1) a retail merchant shall pay the person the proceeds of the sale of an item not later than thirty (30) days after the retail merchant receives the payment; and
(2) if the sale of the item is on installment, the retail merchant shall first apply funds from an installment to pay any balance due to the person on the sale.
The terms of an express written agreement that alters a provision set forth in subdivision (1) or (2) must be clear and conspicuous.
(1) a customer who has placed a deposit on an item purchases the item; and
(2) the customer's deposit is used in whole or in part to pay for the item;
the deposit shall be treated in accordance with subsection (d).
(f) Except as provided in subsection (g), if an item is lost or damaged while in the possession of a retail merchant, the retail merchant is strictly liable for the loss or damage in an amount equal to the value of the item as set forth in section 11(a)(1) of this chapter.
(g) A retail merchant is not liable for the loss of or damage to an item in the retail merchant's possession if:
(1) the loss or damage occurs more than thirty (30) days after:
(A) the date by which the person must remove the item, as specified in a written agreement between the retail merchant and the person; or
(B) the date on which the retail merchant sends written notice to the person by registered mail at the person's last known address that the person must remove the item, if a written agreement described in clause (A) does not exist; and
(2) the item was in the retail merchant's possession at the time
of the loss or damage because the person failed to remove the
Sec. 9. (a) If a item is trust property under section 8 of this chapter when a retail merchant initially receives it, the item remains trust property until the balance due the consignor from the sale of the item is paid in full, even if the retail merchant directly or indirectly purchases the item for the retail merchant's own account.
(b) If an retail merchant resells an item described in subsection (a) to a bona fide purchaser before the consignor has been paid in full, the item ceases to be trust property and the proceeds of the resale are trust funds in the hands of the retail merchant for the benefit of the consignor to the extent necessary to pay any balance due the consignor. The trusteeship of the proceeds continues until the fiduciary obligation of the retail merchant with respect to the transaction is discharged in full.
Sec. 10. Trust property under section 10 or 11 of this chapter is not subject to a claim, lien, or security interest of a creditor of the retail merchant.
Sec. 11. (a) A retail merchant may accept an item for commission on consignment from a person only if, not later than seven (7) days after accepting the item, the retail merchant enters into a written contract with the person that specifies the following:
(1) The value of the item.
(2) The time within which the proceeds from the sale must be paid to the consignor if the item is sold.
(3) The commission the retail merchant is to receive if the item is sold.
(4) The minimum price for the sale of the item.
(5) Any discounts ordinarily given by the retail merchant in the regular course of business.
(b) If a consignor violates this section, the consignor may bring an action in a court with jurisdiction to void the consignor's contractual obligations to the retail merchant. A retail merchant who violates this section is liable to the consignor in an amount equal to:
(1) fifty dollars ($50);
(2) any actual, consequential, or incidental damages sustained by the consignor because of the violation of this section; and
(3) reasonable attorney's fees.