CLASSIFICATION OF AGENTS
CONTENTS
1.0 Introduction
2.0 Objectives
- Main Content
- General and Special Agents
- Commission Agents
- Mercantile Agents
- Factors
- Brokers
- Del Credere Agents
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Readings
INTRODUCTION
In view of modern developments in trade and commerce and changing need for specialization certain types of agents have distinguished themselves by name, character and function. Consequently, they have been invested with varying degrees of authority and power arising from the customs, trade, business or profession in which they belong or operate or simply from their distinct peculiarities.
It has therefore been realized that there is need for such types of agents to be specifically distinguished and examined in some detail here for proper understanding and assimilation.
OBJECTIVES
The main objective of this unit is to identify and thoroughly examine th e various types of agents that exist and attempt a through comparison of them with the aim of bringing out their peculiar features as they relate to modern commercial transactions.
MAIN CONTENT
General and Special Agents
Agents are classified as either “general” or “special” agents. The primary distinction between the two types lies in the nature of the authority given or accorded to each and the extent to which their exercise affects the position of the principal.
A General Agent is one who is authorized to act for and on behalf of his principal in all his affairs in connection with a particular kind of business, trade or profession or who represents him in the ordinary course of his own trade, business or profession, as agent.
An example of a general agent is a director of a limited liability company who acts for the purpose of the company’s business. In the same vein, a solicitor, broker or auctioneer who is engaged to perform in the ordinary course of his own business is a general agent of his employer in relation to that employment.
A special agent on the other hand is one authorized to act for and on behalf of his principal on or for special occasion. Such an agent may also be required to handle a particular transaction or to do a specific act which is not within the ordinary course of his trade, business or profession. An example of this is a dealer in goods taken on hire- purchase for the purpose of executing the necessary hire-purchase documents, paying the initial deposits, taking delivery of the goods and in some cases receiving the periodic payments.
Distinction between General and Special Agents
The distinguishing feature between the two classes of agents lies in the nature and character of the authority given or accorded and its scope in relation to third parties.
In this connection, the court observed in Buller v. Maples (1869)9 Wall 766 that:
“The purpose of (a special agency) is a single transaction or a transaction with designated persons …. Authority to buy for the principal a single article of merchandise by one contract, or to buy several articles from a person named, is a special agency. But authority to make purchase from any persons with whom the agent may choose to deal, or to make an indefinite number of purchases is a general agency”.
SELF ASSESSM ENT EXERCISE 1
Define and distinguish between general and special agents.
Commission Agents
A commissioned agent is the one to whom certain goods have been consigned for a foreign principal. This type of agent belongs to a recognized class of commercial agents whose rights and obligation are superimposed between the ordinary relationship of principal and agent on the one hand, and a buyer and seller on the other.
A commissioned agent is therefore saddled with dual responsibility. The first being an agent to his principal with equal rights and obligation of any other agent. The second is that who does not bind his principal contractually to third parties. Instead, he stands in his own right in the position of principal to such third parties.
The peculiar feature of this category of commercial agents was identified by Lord Blackburn in Ireland v. Livingstone (1872) A.C. 395. In that case he stated that a person who supplies goods to a commissioned agent has no authority to pledge the credit of his principal for them.
SELF ASSESSM ENT EXERCISE 2
Define a commissioned agent and state its roles in commercial transaction.
Mercantile Agents
A mercantile agent is an agent having in the course of his business, as such agent, authority to sell or to consign goods for the purpose of sale, or to buy goods or to raise money on the security of goods. In essence, when one is dealing with a mercantile agent, it becomes pertinent to inquire whether in the “customary course of the agent’s business he has authority to sell, consign for sale or to buy or raise money on the security of goods in his possession as such agent.
This is so because there are many kinds of agents who receive or are in possession of goods, yet it is not their duty to sale or consign them for sale or to raise money on them. It is important therefore, that when one is dealing with an agent in possession of goods, one has to consider what sort o f agent he is and what his customary course of business wound be when he is getting in the capacity of an agent.
In Oppenhiemer v. Attenborough (1708) 1 K.B 221 a distinction between “customary case of business “and “ordinary course of business” by LORD BUCKLEY. According to the learned judge, a customary course of business speaks of the arrangement made between the owner of goods and his agent. It contemplates that the principal has given possession of the goods to the agent in the course of business which the principal knows or believes the agent carries on as a mercantile agent. It deals with the situation under which the agent gets his authority.
On the other hand, in ordinary course of business, has to do with the stage at which the agent is going to deal with the goods in his possession with reference to some other person.
There are three types of mercantile agents. These are Factors, Brokers and Del Credere Agents.
Factors
The term “Factor” has not been defined in any statute book, both foreign and local. However, under the common law it has been defined as referring to a mercantile agent who has been entrusted with the possession of goods for sale only. In Barrin Corrie (1818)2 B & AID. 137, Abott C. J., described a factor as a person to whom goods are consigned for sale by a merchant residing abroad or at a distance away from the place of sale and who normally sells in his own name without disclosing that of his principal.
This definition was qualified in Stevens v. Biller (1884)25 CH. D. 31 where it was held that an agent does not lose his character of factor by reason of his acting under special instruction from his principal to sell the goods at a particular price and to sell in the principal’s name.
Brokers
A broker is a mercantile agent who, in the ordinary course of his business is employed to make contact with third parties for the purchase of goods, or property or for the sale of his principal’s goods or property of which he is not entrusted with possession or document of title thereto. He has been described under the common law as an agent employed to make bargains and contact between persons in matter of trade, commerce and navigation. He is a mere negotiator between such persons with no possession of the goods. He lacks the power or authority to determine whether the goods belong to the buyer or seller and no legal or power to determine whether the goods should be delivered to the one or be kept by the other.
In essence, a broker is not entrusted with the possession of the goods and has authority to sell them in his own right or name. Possession or control of the goods of the principal by the factor distinguishes him from a broker and he is personally liable when contracting for a foreign principal, while the broker incurs no personal liability if he does not exceed his authority or instruction.
Del Credere Agent
A del credere agent is defined as one who, in consideration of extra remuneration called a del credere commission, guarantees to his principal that third parties with whom he enters into contract for and on behalf of the principal shall duly pay any sums becoming due under those contracts. The element of extra remuneration by way of del credere commission is indispensable to the establishment of a del credere agency and it is this feature that mainly distinguishes it from any other agent.
Therefore, where there are no words in an agency contract from which it can be held that a higher reward is being paid to the agent in consideration of his assuming liability for any amounts due from third parties and there is nothing in the course of conduct between the agent and the principal from which such arrangement can be inferred, the agent is not in del credere agent.
SELF ASSESSMENT EXERCISE 3
- What are the main features of a mercantile agent
- Distinguish between the three major types of a mercantile agent
CONCLUSION
We identified and examined three types of agents. They are: general and special agents, commission agents and mercantile agents. By this revelation, it is apparently clear that students can now easily distinguish the different types of agents in commercial transactions.
SUMMARY
This unit has dealt with the following points:
- General and Special agents
- Commission agents
- Mercantile agents
- Brokers
- Del Credere agents
TUTOR-MARKED ASSIGNMENT
- Attempt the definition and distinctions between a general agent and a special agent.
- What are the main features of a commission agent.
- Mercantile agent’s only deals with merchants;
- differentiate between a Factor, a Broker and a Del Credere Agents.
REFERENCIES/FURTHER READINGS
Kingsley Igweike (1993). “Nigeria Commercial Law: Agency.” Jos, Nigeria: FAB Educational Books.
Sir William Holdsworth, “A History of English Law,” Vol. IV. American Restatements, Second, Agency, Article.
Friedman, G.H.L. (1984). Law of Agency, 7th Edition. London: Butterworths