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
- 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.
- Joint venture: The parties involving in the joint ventures are known as co-ventures.
- Consignment: Consignor and consignee are involving parties in the consignment.
- 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.
- 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.
- 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.
- 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.