First Regular Session 116th General Assembly (2009)
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HOUSE ENROLLED ACT No. 1271
AN ACT to amend the Indiana Code concerning trade regulation.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 6-2.5-6-17; (09)HE1271.1.1. -->
SECTION 1. IC 6-2.5-6-17 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2009]: Sec. 17. (a) A retail merchant that is a consignee in a retail
transaction shall collect and remit the state gross retail tax on the
gross retail income received in a consignment sale.
(b) The retail merchant shall provide the consignor purchaser
an invoice that shows that the state gross retail tax was paid to the
retail merchant with a clear notation on the invoice that the item
was a consignment sale by the retail merchant on behalf of (insert
the name of the seller) to (insert the name of the purchaser).
SOURCE: IC 24-4-17; (09)HE1271.1.2. -->
SECTION 2. IC 24-4-17 IS ADDED TO THE INDIANA CODE AS
CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
Chapter 17. Retail Consignment Sales
Sec. 1. (a) Except as provided in subsections (b) through (d), this
chapter applies to an item delivered to a retail merchant after June
(b) This chapter does not apply to an item that has a value less
than fifty dollars ($50).
(c) This chapter does not apply to an item offered at auction, or
held by an auctioneer before or after being offered at auction.
(d) If a provision of this chapter conflicts with the Uniform
Commercial Code (IC 26-1), the Uniform Commercial Code
controls with respect to that provision.
Sec. 2. As used in this chapter, "bona fide purchaser" means a
person who in good faith makes a purchase without notice of any
outstanding rights of others.
Sec. 3. As used in this chapter, "claim" means a right to
payment, whether or not the right is reduced to judgment,
liquidated, fixed, matured, disputed, secured, legal, or equitable.
The term includes costs of collection and attorney's fees only to the
extent that the laws of Indiana permit the holder of the claim to
recover them in an action against the obligor.
Sec. 4. As used in this chapter, "commission" means the fee that
a consignor and a retail merchant have agreed that the retail
merchant may retain after the sale of the consignor's item to a
third party. The term includes any form of compensation,
including a percentage of the actual selling price of an item.
Sec. 5. As used in this chapter, "creditor" means a person who
has a claim.
Sec. 6. As used in this chapter, "on consignment" means that no:
(1) title to;
(2) estate in; or
(3) right to possession of;
an item superior to that of the consignor vests in the consignee,
even if the consignee has the authority to transfer the consignor's
right, title, and interest in the work of art to a third party.
Sec. 7. As used in this chapter, "retail merchant" means a retail
merchant making a retail transaction as described in IC 6-2.5-4-1.
Sec. 8. (a) When a person delivers an item to a retail merchant
for the purpose of:
(2) exhibition; or
(3) sale and exhibition;
for a commission, the delivery to and acceptance of the item by the
retail merchant places the item on consignment, unless the delivery
is under an outright sale for which the person receives full
compensation for the item upon delivery.
(b) A retail merchant described in subsection (a) is the agent of
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
(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
(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;
(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
(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
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
(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.
HEA 1271 _ Concur
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