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Mercantile Agents: Meaning, Importance and Other Details

He reported his taxes on a form for the self-employed and hired an accountant to prepare it for him. The court agreed with the compensation board that these facts established the salesman’s status as an independent contractor. The status of the agent will be relevant because only professional agents will attract apparent authority for the purposes of the exception to the nemo dat rule. Where the agent is a ‘mercantile agent’ and is instructed as such by the owner, then the buyer is entitled to assume that the agent’s authority extends to all acts which would usually be performed by an agent in that agent’s position.

A fundamental principle of criminal law, with regards to the common law is that the prosecution has the element of proving the defendant’s guilt in every aspect…. In Great Britain and other some European countries, trade protective societies composed of merchants and tradesmen have been formed for the promotion of trade; their members exchange information regarding the standing of business houses. The societies had their origin in the associations formed in the mid-18th century for the purpose of disseminating information regarding bankruptcies, assignments and bills of sale.

  1. He tries to acquire buyers for sellers of products and also sellers for the buyers of goods.
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  3. The mercantile agency in the United States is a much more comprehensive organization and came into existence after the financial crisis of 1837.
  4. Their team of experienced and knowledgeable agents work to negotiate deals with buyers and sellers, identify potential buyers and sellers, and arrange for the transport of goods and services.

This would appear to be unfair and is an example of the inconsistency of the exceptions to the nemo dat rule. Usually, a broker does not take possession of title to goods, but only negotiates for their use. Secondly, the purchaser must be a private purchaser, and not a dealer or even a person simply seeking to make a profit on resale. [29] Most importantly, the seller must be someone who is hiring the vehicle under a hire purchase agreement or buying it under a conditional sale agreement.

This book is licensed under a Creative Commons by-nc-sa 3.0 license. See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don’t make money from it, and do make it available to everyone else under the same terms. (e) To claim from the principal his commission and incidental expenses. With the rapid development in the field of business activities, the business of today is not confined to a village or a town or a state. It is fast expanding and reaching far and wide, even to the remotest corners of the globe.

Mercantile agencies

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On discovering the fraud the finance company sought ownership of the van. The customer had maintained possession of the goods, which will be seen in the following section on statutory exceptions is important, but had lost his ownership to the finance company on the basis of estoppel. This distinction between agent and independent contractor has important legal consequences for taxation, workers’ compensation, and liability insurance. For example, employers are required to withhold income taxes from their employees’ paychecks. But payment to an independent contractor, such as the plumber for hire, does not require such withholding. Deciding who is an independent contractor is not always easy; there is no single factor or mechanical answer.

Moreover, the problems of time, distance and efficiency have also cropped up. So in order to overcome all these difficulties, need was felt for appointing a person who could work on behalf of the businessman and help him in carrying on his business more efficiently and smoothly. (e) He is entitled to a commission from his principal, as a monetary consideration for his services.

The agency relationship then is said to have been implied “by operation of law.” Children in most states may purchase necessary items—food or medical services—on the parent’s account. Long-standing social policy deems it desirable for the head of a family to support his dependents, and the courts will put the expense on the family head in order to provide for the dependents’ welfare. The courts achieve this result by supposing the dependent to be the family head’s agent, thus allowing creditors to sue the family head for the debt. An agent is a person who acts in the name of and on behalf of another, having been given and assumed some degree of authority to do so. Most organized human activity—and virtually all commercial activity—is carried on through agency.

In some cases the seller may sell goods to one buyer and then, having retained possession of the goods, seek to sell them to another buyer. Section 24 of the Sale of Goods Act 1979 provides an exception to the nemo dat rule in these circumstances, as does the slightly wider section 8 of the Factors Act 1889. The section applies where the seller has already sold goods, rather than where the first disposition is an agreement to sell. It also applies only where the goods or documents of title are actually delivered or transferred to the second buyer. The exception provides that in these circumstances it will be the second buyer who obtains ownership of the goods. A del credere might choose to only work with buyers with a certain credit rating or level of solvency to better ensure they will consistently pay their bills.

Judicial factor

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Lumber Yard, not knowing that Arthur’s employment terminated the day before, bills Paul. Yes, because the termination of the agency was not mercantile agent examples communicated to Lumber Yard. This issue is discussed further in Chapter 26 “Liability of Principal and Agent; Termination of Agency”.

Mercantile factors

After the highest bid is accepted, the auctioneer becomes the agent for both seller and buyer. For his services, the auctioneer is entitled to a commission, which is a certain percentage of the sale proceeds, usually fixed between him and the seller, prior to the auction. The nemo dat rule, without the exceptions listed above, would be a very harsh rule indeed, as it would always punish the innocent third party and never the owner, despite any fault on the part of the owner. However, the nemo dat rule will often leave innocent third parties without redress unless they can fit themselves precisely within one of the specific and narrow exceptions. [30] The exceptions are piecemeal and may be described as ‘confused’. In areas of social need, courts have declared an agency to exist in the absence of an agreement.

There are, however, a few situations in which the capacity of the agent is important. Such agents despatch goods to foreign countries on behalf of their principals and play an important part in the international trade transactions. They take possession of goods in the home country and then arrange for its shipping and insurance before despatching them abroad. A del credere agent is a combination of a salesperson and an insurance firm.

Because of the apparent harshness of the nemo dat rule, several exceptions to it were developed at common law and also have been added by statute. All of the exceptions will apply only in favour of a person who acquires the goods in good faith and without notice of the rights of the original owner. [10] The common law exceptions are around agency arrangements, estoppel and (previously) market overt. A key point to note is that a del credere agent only becomes liable to pay the principal after the buyer defaults on payment. If the principal (seller) is unable to collect for some other reason, such as a dispute over the goods delivered, the del credere agent is not liable. Most modern factor business is in the textile field, but factors are also used to a great extent in the shoe, furniture, hardware, and other industries.

Last, but not least – the auctioneer has no rights to sell goods of his client by private contract. Where the agent in question is not a mercantile agent, the common law exception to the nemo dat rule will not apply at all, and it will be the buyer who is taken to have accepted the risk. Thus, in Jerome v Bentley & Co [15] the plaintiff had entrusted a diamond ring to a man named Tatham to sell for £550. Tatham was to keep anything in excess of £550 but was to return it if not sold within seven days. Tatham sold the ring after eleven days for £175 and represented himself to the defendants as the owner.

Add mercantile agent to one of your lists below, or create a new one. Such a person today is known as a Mercantile or Commercial Agent and has become indispensable for modern business. Thus we see that Mercantile Agent today plays a vital role in the transfer of goods from the producer to the ultimate consumer. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.