Joint Ventures and Consignment are different methods of doing business. If co-venturers consign goods to each other or to third parties, then such transaction can be called as Joint Consignment. It is different from consignment.
Difference Between Joint Venture and Consignment
(1) Nature
- Joint venture: It is a temporary partnership business without a firm name. is the temporary business between the two firms for a particular purpose or up to a limited time period.
- Consignment: It is an extension of business by the principal through an agent. It is the dispatch of the goods by the consignor to the consignee to be sold by the consignee.
(2) Parties
- Joint venture: The parties involving in the joint ventures are known as co-ventures.
- Consignment: Consignor and consignee are involving parties in the consignment.
(3) Relation
- Joint venture: The relation between co-ventures is just like the partners in partnership firms.
- Consignment: The relation between the consignor and consignee is ‘principal and agent’.
(4) Sharing Profit
- Joint venture: The profits and losses of the joint venture are shared among the co-ventures in their agreed proportion.
- Consignment: The profits and losses are not shared between the consignor and consignee. Consignee gets only the commission.
(5) Rights
- Joint venture: The co-ventures in a joint venture have equal rights.
- Consignment: In consignment, the consignor enjoys the principal’s right whereas the consignee enjoys the right of the agent.
(6) Exchange of Information
- Joint venture: The co-ventures exchange the required information among them regularly.
- Consignment: The consignee prepares an account sale that contains details of business activities carried on and is being sent to the consignor.
(7) Ownership
- Joint Venture: All the co-ventures are the owners of the joint venture. The co-venturers are the joint owners of the goods and property of the business.
- Consignment: The consignor is the owner of the business. The consignor is the owner of the goods, only the possession is transferred to the consignee.
(8) Method of Maintaining Accounts
- Joint venture: There are different methods of maintaining accounts in the joint venture. As per the agreement the co-ventures maintain their account.
- Consignment: In consignment, there is only one method of maintaining an account.
(9) Basis of Account
Joint venture: Cash basis of accounting is applicable in a joint venture.
Consignment: An actual basis is adopted in consignment.
(10) Continuity
- Joint venture: As soon as the particular venture is completed, the joint venture is terminated. The joint venture comes to an end when the venture or the purpose is fulfilled.
- Consignment: The continuity of business exists according to the willingness of both consignor and consignee. The continuity depends on the will of the consignor and the consignee.
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